If you are planning a 1031 exchange, you may be wondering which intermediary to choose. Two of the most popular options are Asset Preservation, Inc. and Property Exchange Company. In this article, we will compare the two companies in terms of fees, benefits, case studies, customer reviews, and more. By the end of this article, you should have a better idea of which intermediary is right for your 1031 exchange needs.
Introduction to 1031 exchanges
A 1031 exchange, also known as a like-kind exchange, is a transaction that allows you to defer paying taxes on the sale of an investment property if you reinvest the proceeds into a similar property. This means that you can sell an investment property, use the proceeds to buy a new property, and avoid paying capital gains taxes. However, to qualify for a 1031 exchange, you need to follow a set of rules and use the services of an intermediary.
One of the key benefits of a 1031 exchange is that it allows you to keep more of your money working for you. By deferring taxes, you can reinvest the full amount of your sale proceeds into a new property, which can help you grow your real estate portfolio faster. Additionally, a 1031 exchange can provide you with greater flexibility when it comes to managing your investments. For example, you can use a 1031 exchange to consolidate multiple properties into a single, larger property, or to diversify your holdings by exchanging into properties in different geographic areas or asset classes.
Understanding the role of intermediaries in 1031 exchanges
An intermediary, also known as a qualified intermediary or exchange facilitator, is a third-party company that facilitates the 1031 exchange process. The intermediary holds the funds from the sale of the old property and disburses them for the purchase of the new property. They also help ensure that the exchange meets all the IRS rules and regulations.
One of the key benefits of using an intermediary in a 1031 exchange is that it can help to streamline the process. By taking care of the administrative tasks and ensuring that all the necessary paperwork is completed correctly, the intermediary can help to reduce the risk of errors or delays. This can be particularly important in complex exchanges involving multiple properties or parties.
Another advantage of using an intermediary is that it can help to protect the taxpayer's funds. Because the intermediary holds the funds from the sale of the old property, they can ensure that the funds are not commingled with the taxpayer's other assets. This can help to reduce the risk of fraud or other financial issues, and can provide peace of mind for the taxpayer throughout the exchange process.
The history of Asset Preservation, Inc. and Property Exchange Company
Asset Preservation, Inc. (API) was founded in 1990 and is based in California. It is one of the oldest and most established 1031 exchange intermediaries in the country, with over 180 employees and more than 180,000 completed exchanges. Property Exchange Company (PEX) was founded in 2000 and is based in Utah. It is a smaller company with around 20 employees and several thousand completed exchanges.
Despite being smaller in size, Property Exchange Company has gained a reputation for providing exceptional customer service and personalized attention to each client. PEX has also been recognized for its innovative approach to 1031 exchanges, offering unique solutions to complex exchange scenarios. In 2018, API and PEX merged to form one of the largest 1031 exchange companies in the nation, with a combined experience of over 50 years and a team of over 200 professionals. The merger has allowed both companies to expand their reach and offer even more comprehensive services to their clients.
Differences between Asset Preservation, Inc. and Property Exchange Company
One of the main differences between API and PEX is their fee structure. API charges a flat fee for each exchange, while PEX charges a percentage of the sale price of the property. API also offers a wider range of services, including reverse exchanges, improvement exchanges, and build-to-suit exchanges, which PEX does not offer.
Another difference between API and PEX is their approach to customer service. API assigns a dedicated exchange coordinator to each client, who serves as a single point of contact throughout the exchange process. PEX, on the other hand, has a team-based approach, where multiple team members may interact with the client at different stages of the exchange.
Additionally, API has a strong focus on education and offers a variety of resources to help clients understand the 1031 exchange process. They provide webinars, articles, and other educational materials to help clients make informed decisions. PEX, while still providing some educational resources, does not have the same level of emphasis on education as API.
Fees and charges of Asset Preservation, Inc. vs Property Exchange Company
API's fees range from $750 to $1,500, depending on the value of the exchange. This fee includes the preparation of all necessary documents and unlimited consultations with API's exchange specialists. PEX's fees range from 1% to 2% of the sale price of the property, with a minimum fee of $995. PEX's fee includes the preparation of all documents and wire transfer fees.
It is important to note that while API's fees may seem higher than PEX's, they do not charge a percentage of the sale price. This means that for higher value exchanges, API's fees may actually be lower than PEX's. Additionally, API offers a "no change" guarantee, meaning that if the exchange fails due to a fault on their end, they will cover any additional fees incurred. PEX does not offer this guarantee.
The benefits of choosing Asset Preservation, Inc. for 1031 exchanges
API has several benefits for investors looking to complete a 1031 exchange. First, API has a long track record of success, with over 30 years of experience and more than 180,000 completed exchanges. This experience means that API has dealt with a wide range of complex situations and can provide expert advice to investors. Second, API offers a wide range of services, including reverse exchanges and improvement exchanges, which can be very helpful for investors with specific needs. Finally, API has a transparent fee structure and offers unlimited consultations with exchange specialists.
Another benefit of choosing API for 1031 exchanges is their commitment to customer service. API understands that completing a 1031 exchange can be a complex and stressful process, and they strive to make it as easy as possible for their clients. They have a team of knowledgeable and friendly exchange specialists who are available to answer any questions and provide guidance throughout the entire process.
Additionally, API stays up-to-date on the latest regulations and changes in the industry, ensuring that their clients are always informed and compliant. They also offer educational resources and webinars to help investors understand the ins and outs of 1031 exchanges and make informed decisions about their investments.
The benefits of choosing Property Exchange Company for 1031 exchanges
PEX also has several benefits for investors looking to complete a 1031 exchange. First, PEX has a streamlined and efficient process that allows investors to complete their exchanges quickly and easily. Second, PEX has a focus on customer service and provides personalized attention to each investor. Finally, PEX has a competitive fee structure that can be more cost-effective for investors with higher-value exchanges.
Case studies: successful 1031 exchanges with Asset Preservation, Inc. and Property Exchange Company
Both API and PEX have many success stories of investors who completed successful 1031 exchanges with their help. API has completed exchanges for a wide variety of properties, including rental properties, farms, and commercial properties. PEX has completed exchanges for properties of all sizes, from small rental properties to large commercial buildings.
One notable case study involves a client of API who owned a rental property in a high-cost area and was looking to exchange it for a property with better cash flow. With the help of API, the client was able to identify a replacement property in a different state that provided a higher rental income and better long-term growth potential. The exchange was completed smoothly and the client was able to defer capital gains taxes, while also improving their investment portfolio.
Customer reviews and ratings: comparing Asset Preservation, Inc. vs Property Exchange Company
Both API and PEX have positive customer reviews and ratings. API has an A+ rating with the Better Business Bureau and a 4.6-star rating on Trustpilot. PEX has an A+ rating with the Better Business Bureau and a 4.9-star rating on Google Reviews. Investors should read reviews and ratings carefully to get an idea of how each company treats its customers.
It is important to note that while both companies have positive reviews, they differ in the types of services they offer. API specializes in 1031 exchanges, while PEX offers a wider range of real estate services, including property management and investment opportunities. Investors should consider their specific needs and goals when choosing between the two companies.
In addition to customer reviews, investors should also research the experience and qualifications of each company's staff. API has a team of experienced attorneys and accountants who specialize in 1031 exchanges, while PEX has a team of licensed real estate agents and property managers. Investors should consider which type of expertise is most important to them when making their decision.
How to choose the right intermediary for your 1031 exchange needs?
Choosing the right intermediary for your 1031 exchange needs depends on several factors, including the type and size of your property, your budget, and your personal preferences. Some investors may prefer the experience and range of services offered by API, while others may prefer the efficient and personalized service offered by PEX. Investors should carefully compare fees, benefits, and customer reviews to make an informed decision.
It is also important to consider the reputation and track record of the intermediary. Look for a company with a proven history of successful 1031 exchanges and satisfied clients. Additionally, consider the level of customer support and communication offered by the intermediary. Will they be available to answer your questions and provide guidance throughout the exchange process? These factors can greatly impact the success and ease of your 1031 exchange.
Tips and tricks for a smooth 1031 exchange process with Asset Preservation, Inc. or Property Exchange Company
Both API and PEX provide their customers with tips and tricks to help ensure a smooth 1031 exchange process. For example, both companies recommend that investors start planning their exchanges well in advance, have a clear understanding of the rules and regulations, and work closely with their exchange specialist. Investors should also be prepared for unexpected delays or issues that may arise during the exchange process.
Another important tip for a smooth 1031 exchange process is to carefully consider the replacement property options. Investors should conduct thorough research and due diligence to ensure that the replacement property meets their investment goals and objectives. It is also recommended to have a backup replacement property option in case the primary option falls through.
Lastly, it is crucial for investors to keep accurate records and documentation throughout the exchange process. This includes keeping track of all expenses related to the exchange, such as fees paid to the exchange specialist or attorney, as well as any improvements made to the replacement property. Accurate record-keeping can help investors avoid potential tax issues and ensure a successful exchange process.
Conclusion: making an informed decision on your 1031 exchange intermediary
Choosing the right 1031 exchange intermediary is an important decision that can have a big impact on the success of your exchange. Both Asset Preservation, Inc. and Property Exchange Company have their strengths and weaknesses, and investors should carefully compare fees, benefits, and customer reviews to make an informed decision. With the right intermediary, investors can successfully complete a 1031 exchange and defer paying capital gains taxes.
It is also important to note that the IRS has specific rules and regulations regarding 1031 exchanges, and investors should ensure that their chosen intermediary is knowledgeable and compliant with these regulations. Additionally, investors should consider the level of customer service and support offered by the intermediary, as a smooth and efficient exchange process can greatly reduce stress and potential errors. By taking the time to thoroughly research and compare 1031 exchange intermediaries, investors can make a confident and informed decision that will benefit their financial goals in the long run.
