1031 Exchanges Honolulu HI

This article discusses the benefits of 1031 exchanges and explains how they can be used to better leverage real estate in an investor's portfolio.

Local Companies

Am Financial Services Inc
(808) 737-0976
Honolulu, HI
Smith Barney
(808) 521-2961
1099 Alakea St Ste 2300
Honolulu, HI
Jcw Partners Llc
(808) 523-1116
1188 Bishop St Ste 2706
Honolulu, HI
Bankoh Investment Services Inc
(808) 694-8500
130 Merchant St
Honolulu, HI
Myojo Asset Management Hawaii Llc
(808) 956-1313
1441 Kapiolani Blvd
Honolulu, HI
Pono Capital Management Inc
(808) 595-0488
Honolulu, HI
Hawaii Capital Management
(808) 791-1111
Honolulu, HI
Ameriprise Financial Services Inc
(808) 942-7797
1585 Kapiolani Blvd Ste 1736
Honolulu, HI
Steslow John
(808) 531-7575
Honolulu, HI
Bidwell C M & Associates Ltd
(808) 595-1099
20 Old Pali Pl
Honolulu, HI

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1031 exchanges remain one of the most powerful investment tools, yet they are also one of the most misunderstood and under-used. 1031s were created by the government to help investors increase their returns through continual investing. Investors need to understand how to leverage their portfolio using 1031 exchanges to best maximize future growth.
To put it in perspective, one can imagine 1031s as free capital with:

  • 0% interest: The investor pays no interest on the money the government gives them.
  • High LTV: The capital can be leveraged at the investor’s highest LTV capability. 
  • No Due Date: Investor keeps the money as long as it is invested in real estate. 
  • 85% Free Profits: The investor keeps 85% of what the government's (leveraged) money makes them—these are free profits from an outside money source.
  • Potential Non Re-Payment: With proper long-term investment practices and proper financial planning, the investor may be able to avoid fully paying back the government’s money (this may also include not having to pay back any depreciation recapture).

Tax free compounding growth through 1031 exchangesCommon misconceptions

The most common misconception with 1031 Exchanges is that they save you money. The thought process goes something like this: “If I do a 1031, I don’t have to pay the government their taxes this year; thus I saved a little bit of money.” However, there are two major problems with this line of thinking. First, 1031s by design only defer an investor’s tax obligation, thus the investor still owes the money and has not saved a penny. Second, this thought process requires the investor to look backwards at the property sold as a profit source—not forward at the properties to be purchased—and looking backwards inevitably decreases potential returns.

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Author: Ken Zimmerman
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Related Local Event
CFA Hawaii Annual Institutional Investor Conference: Investing in the New World
Dates: 7/14/2009 - 7/14/2009
Location: Ala Moana Hotel
Honolulu, HI
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