Investors know it’s important to keep up with investment trends. In this episode, René Nelson briefs listeners on trends affecting 1031 exchanges in Eugene.
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Patrick: Today we’re with René Nelson, CCIM, a well-known multi-family expert and commercial real estate broker.
René, what trends are you seeing with 1031 exchanges in Eugene?
René: Right now, we’re seeing lots of 1031 buyers in the Eugene market repositioning their assets and going into larger properties and better-performing properties. With low interest rates, many buyers are able to use some leverage, anywhere from 60 to 70% and move into much larger properties, so they’re going from eight-unit up to a 20-unit right now.
Why are there so many 1031 buyers moving around in the market?
René: Well Patrick, that’s a great question. The combination of the results of the presidential election and many companies trying to figure out the impact of that election on their business and now coupled with some high interest rate spikes, we’re starting to see some 1031 buyers that have decided it’s time to make their move. The anticipation is that the Federal Reserve may raise rates on March 14th, and if they do that, that’s most likely an indication that they’re going to continue to raise interest rates this year, probably another three to four times. That, of course, will impact how much a borrower can borrow, so it’s starting to move people and they’re thinking, “Okay, if I’m going to do a 1031 exchange, I better do it now.” Yet despite the increase in interest rates, we’re still seeing strong confidence among 1031 buyers because they know that multi-family is really a great avenue to go into, so they’re making their move now and going into other properties.
René, what would you say is the best strategy for a 1031 buyer right this moment?
René: The first thing that a 1031 buyer needs to do is clearly identify what’s the value of their property that they’re going to sell. We call that their down leg, and then they need to know their options for their exchange. Do they want to go into multi-family? Do they want to look at other passive real estate opportunities? There’s lots of other commercial real estate that’s not strictly multi-family and often, many investors are surprised at how much they can improve their rate of return and their overall cash flow when they start looking at their options. I can show 1031 buyers how to reposition their portfolio and look at other options, not strictly or exclusively multi-family, if they want to see other ideas.
Thank you, René. That’s great information for our listeners. Folks, to get more information, go to eugene-commercial.com or call René at 541-912-6583.
As the local expert on 1031 exchanges, René knows what trends are important for investors to know. Regularly follow our blogcast series to stay up-to-date on everything you need to know.
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