Rate Your Investment Properties

How is each property performing?
Is it easy & convenient to maintain?
Is it profitable?  
Would other   properties draw faster growth or  offer less risk?

Each year investors should take just a few moments to re-evaluate each of their properties.   A good time for an evaluation may be right after you've completed your year end balance sheets.   This  very simplistic but effective way to evaluate your properties is suggested by Starker Services (a very reputable 1031 Intermediary) and is called:
"The Smile Test"

  1. "A Properties" are those that make you smile when you think about them.   Of course, if the property is very profitable by appreciation and even monthly positive cash flow you'd likely want to keep it around.   They may be particularly easy and/or close to maintain even if they aren't tremendously profitable at this time, like when appreciation is slow but your tenants there have been there for several years and never call you with problems.
    If you're smiling, they  qualify as keepers.    Don't mess with them.

  2. These "B Properties" are those that you're just not sure about because they're not tremendous performers but as yet don't cause dramatic losses.   Maybe they're not very convenient or particularly easy to maintain, but  still  haven't  dipped too heavily into your time to bump them down to a "C Property" position.   Overall, "B" properties don't  really make you  smile or frown.   They are just kind of....there.
    "B Properties" should be thought about carefully to see if there is something that could be done to make  them more appealing in the future, then re-evaluated again perhaps in another year.

  3. "C Properties" are any that just make you sad.   Perhaps you can't sleep at night worrying about them.   Perhaps you've moved to another area or city  and those properties  are just not convenient to maintain anymore.   You might want to convert land to rental property  in order to also bring some positive cash flow each month.   Maybe you want to move from rental homes to rental office space.   Is the appreciation slow or the neighborhood not looking as strong as it once did?   Perhaps the tenants this property draws always seem to be late payers or you're realizing negative cash flow each month.   Maybe you have too much equity  in a single property and wish to spread it out for a dramatically greater return.   That of course is what investing is all about, right?
    "C Properties" should be on the top of your list if considering a 1031 exchange.

Using  an IRS 1031 tax deferred exchange, you can trade these "C" level investments for "A" level investments.   This  can quickly  ease  your stress  and in turn stabilize your entire investment portfolio!

Contact the AtlantaPros Team to discuss your 1031 Exchange options.    We  can fully assist you with all aspects of  the exchange in complete cooperation with  your 1031 intermediary.   We  offer full market exposure for the most profitable relinquishment of  your  current properties and we will help identify the best replacement property options  for  use of  your  exchange funds.

For more information please consult your tax professional.

  1. 1031 Exchange - Main Page
  2. Rate Your Investment Properties
  3. Key Points to a 1031 Exchange
  4. The Meaning of "Like Property"
  5. The Exchange

All information believed accurate but not warranted.

Atlanta Communities