GRP Capital was happy to help our Florida client purchase a new hotel, using his proceeds from a previous sale. But even more importantly, our client had an imminent 1031 exchange deadline, so he had to use the proceeds quickly. A 1031 exchange, also known as a like-kind exchange, is a real estate investing tool. It allows investors to swap out one investment property for another, deferring certain capital gains taxes.
GRP Capital President Rick Patel and our entire team worked closely with our client, under the added pressure of the 1031 exchange deadline.
The biggest hurdles were shepherding the loan through the underwriting process, quickly obtaining a survey and working with the franchise team. It was hard work! Rick Patel remarked, “We utilized a third party consulting team to work with the franchise. We had to do this to overcome the mandatory 14 day cooling off period to meet the borrower’s 1031 exchange deadline. In-house, we worked diligently to submit all the required documents quickly and correctly. Timing was absolutely critical for this loan. It was an all hands on deck effort, which we were happy to do for this client.”
What to do if you have a 1031 Exchange Deadline:
• Know your deadline. Many business owners have their eye on purchasing a new property. Sometimes, they plan to sell another asset for their equity injection. That is a great plan. However, make sure the loan is feasible, and that a lender can close the loan to meet your deadline.
• Get all of your own financial documents ready: Lenders will require taxes to be filed (or extensions), as well as financials that are less than 90 days old. Work with your accountant and other professionals, If you know you will be applying for a loan with a tight deadline. Make sure you have your docs in a row.
• Make it legal: Work with your attorney so that your borrowing entity has an operating agreement or bylaws, is registered in the correct state and can be licensed correctly.
Our team specializes in finding the right lender for each project. We save our clients time and provide options, as we research different funding sources. Our experience allows our clients to choose the best loan for them. If you are considering a purchase or a refinance, let us know how our GRP Capital team can be of service.