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When is a 1031 Exchange the Wrong Answer?

The grass is always greener, isn?t it? Maybe you see something better on the other side, or maybe you have problems with one of your current properties. But before diving into a 1031 exchange, consider why you want to exchange, and whether or not it will solve your problems.

? Property Management Problems - If you?ve lost the taste for property management, would another location really change anything? Try hiring a manager. After all, tenant / landlord problems exist everywhere?even with higher priced properties.

? Tax Solutions - It?s true that you can defer your payment of Capital Gain Taxes when you exchange some properties. But if the new property costs as much as the one you sold, then you?ll probably see a property tax hike.

? Income Solutions - A powerful ?grass is greener? temptation is when you start thinking one property will produce more cash than another. It?s true that some will, but ask yourself why you?re having problems now. Is it the property or the management? Lower tax rates and lower maintenance costs, are sometimes good reasons for a 1031 exchange. But if maintenance costs are high because of negligence, you?ll find yourself with the same problem (lacking a paddle) in a new creek.

? Low Adjusted Basis - If you have a low adjusted basis, without a high debt, a 1031 exchange will just carry your benefits over to the new property. It might just be a waste of your time.

? Credit Problems - If the 1013 exchange involves a mortgage loan, bad credit can bring high interest rates or a set of less desireable terms. Not to mention two sets of closing fees. In the end, your cost goes up.

After all that, remember the investment you make in any transaction. Your time. Are you wasting it and what is the risk? 1031 exchanges require a sale and a purchase (with all the money changing finalized) in a specified time period. What happens if there?s a hold up on a loan? How easy will it be to sell your property? How easy will it be to find a replacement? If you already have your eye on something, are you sure it?ll still be available when it comes time to buy?

The benefits of a 1031 exchange cover a well defined area and the lawn clippings look fresh and green. But if you fall outside of that area, a jump over the fence might only lead to a field of dead weeds.

Copyright 2006 YourLenderForLife.com

by Keith John Gill

Should You Invest in a HYIP? Answers to 4 of the Most Commonly Asked Questions

The occurrence of HYIPs is somewhat new, but have gained popularity at a rapid rate. They have become one of the biggest opportunities to make a lot of money fast, but also one of the internet's biggest scams in recent years. They have made a lot of people rich, but have also made a lot of people lose their money. Should you get in on this phenomenon? This article is a reference to aid you in the decision.

What is a HYIP?

HYIP stands for High Yield Investment Program. HYIPs are investment programs normally offered on the internet. They typically accept investments of $100 or less while promising high returns. Interest rates of up to 100% a month is not uncommon. In general the interest rates are ranging anywhere between 5 ? 250% a month. Most only accept payments through e-currency programs such as e-gold because this allows them to accept numerous donations from anywhere in the world.

Where does the money come from?

There are hundreds of different investment strategies used by HYIPs. Some invest in stocks, others in property. There are even HYIPs investing in other HYIPs. Scam HYIPs are Ponzi schemes, in which new investors provide the money to pay a profit to existing investors, which they could then withdraw leaving nothing to pay the new investor. This approach allows the scam to continue as long as new investors are found and/or old investors leave their money in the scheme.

Is it legal?

Some might consider investing in a HYIP gambling. Gambling online is of questionable legal status in the U.S. and other countries, however, the odds of winning cannot be determined, as one cannot know whether one is playing early enough to win money. Thus, it is unlike other forms of gambling, where a player has an equal chance of winning no matter when a ticket is bought, or where the odds of the game are known. In addition, the promise to pay out a percentage of deposits is not a legally binding contract or regulated by a government agency.

Is it worth the risk?

This is a tough question. It really depends. These programs are extremely high risk. There are more scams out there than serious long term programs. Over the years large amounts of people have lost their money as a result of being involved in High Yield Investment Programs. However, if you are aware of the risks, really research the program, and never invest more money than you are willing to lose the payoff could be huge.

by Heather Hain

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