The south-eastern state of US, Alabama, is known for innumerable reasons. Famous sights like Rosa Park's Museum and the church of Martin Luther King Jr. have always been a centre of attraction for anyone landing on the Alabama soil for the first time. The capital city Montgomery itself is popular among the natives as well as the outsiders for its beautiful landscape. However, the state of Alabama isn't only known for its architectural excellence and profound history, it is also considered as one of the best markets for real estate investors, especially for 1031 investors. To understand what 1031 exchange Alabama market has for investors, we reached out to Scott Davis, an experienced 1031 investor presently active in Alabama. You were born in Santa Ana, why you moved to Alabama? What made you change your mind? Frankly, it was Alabama's beautiful landscape that dragged me here. I used to visit my maternal uncle in Montgomery during school vacations. He would offer me a drive in his Fiat every weekend, and we would visit all the famous spots that Alabama is known for. I found all of them intriguing. That was the time when I had decided I would move to this Orange County city had I given any opportunity. I was 16 then. What I didn't know was that it would take me another 14 years to reach here. Your investment was thriving in Santa Ana yet you chose to do a 1031 exchange and shifted your base to Montgomery? Any specific reasons? I had a couple of investment properties in California that were generating considerable revenues. However, the maintenance expense was too high. I had to spend a significant part of my profit in maintaining both properties. Initially, it wasn't a big deal as the profit was good even after deduction. However, the operating expenses associated with both properties had begun to soar gradually and the profit was diminishing at the same pace. When the pressure finally began to pile on, my financial advisor and an old friend, Joshua, suggested me to sell out both properties and reinvest the proceeds in some other income-producing assets. He had introduced me to Section 1031 of IRC or what you call a to connect 1031 exchange, and how it could provide relief from property management. That was enough for me to take the final call. I had to sell my properties, I had to come to Alabama. Being a 1031 investor, how did you find Alabama different from a bigger state like California? 1031 exchange Alabama market has much to offer to investors of all stature. Popular states like California or Texas are known for high-quality institutional-grade properties that have high prices as well. Small investors may not find a place in these states. This is a harsh reality. However, Alabama is different. Not only the giants of the real estate market but even the small investors get a lot of buying options in Alabama. Things like low-income tax rate, strong single-family rental housing market, a massive flow of students and job seekers, low crime rate, and beautiful landscape make Alabama a perfect place for real estate investors as well as for tenants. You may find some of these qualities in bigger states but not all. What would be your biggest advice to someone who is looking to do a 1031 exchange in Alabama? If you want to do it, it's the right time. The best thing about the Alabama real estate market is that it's booming every day. Property's value is skyrocketing year by year. If there is any right time to invest in real estate in Alabama, it's today. But before you do it, don't forget to have a word with your financial advisor or a 1031 expert. I would like to say this only.
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October 2019
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