Beat the 45-Day Clock

The Most Critical Phase of Your Exchange

The 45-day identification period is where most 1031 exchanges succeed or fail. From the moment your relinquished property closes, you have exactly 45 calendar days to identify your replacement properties in writing. There are no extensions, no exceptions, and no workarounds.

Start Before You Sell

The most successful exchangers begin evaluating replacement properties well before their relinquished property closes. Ideally, you should have a short list of potential replacement properties identified before your sale even hits the market. This gives you a significant head start when the 45-day clock begins.

Identification Rules

Three-Property Rule

You may identify up to three properties of any value. This is the most commonly used rule and provides sufficient flexibility for most exchangers.

200% Rule

You may identify more than three properties as long as their total fair market value does not exceed 200% of the value of the relinquished property.

95% Rule

You may identify any number of properties if you acquire at least 95% of the aggregate value of all identified properties. This rule is rarely used due to its strict requirements.

Evaluating Properties Under Time Pressure

When the clock is ticking, you need a structured approach to evaluating replacement properties quickly:

1. Tenant credit quality: Is the tenant investment-grade or near-investment-grade? Check their credit rating, revenue, and financial stability.
2. Lease term remaining: How many years remain on the primary term? Properties with 10+ years of lease term provide the most stability.
3. Rent escalations: Does the lease include scheduled rent increases? Flat leases lose purchasing power over time.
4. Location fundamentals: Is the property in a growing market with strong demographics and traffic counts?
5. Cap rate relative to market: Is the cap rate competitive for the tenant credit quality and lease term?
6. Environmental and title: Are there any red flags that could delay closing past the 180-day window?