Things They Don’t Tell You.
Are you a real-estate investor, wondering if you’re taking advantage of all the programs out there that could potentially save you money? If you are, I have a little story to share.
A friend of mine who is quite smart told me he was thinking of entering a new phase of his financial services career by dealing with tax-advantaged real estate investment products targeted towards rich people (accredited Investors). Unfortunately, financial regulations dictate he wouldn’t be able to advertise his products to his investors, and those who potentially need his products would be hard to find. Even worse, most investors would only need his products once or twice in their lifetimes- not really an optimal scenario as a long-term plan, I thought.
My buddy was quite excited about this opportunity and being the good friend I am, I shared with him that his description of this plan seemed to me like an awful business approach (No points for being subtle).
This is the life of a registered representative today, specifically one who deals in real estate private placements at a broker-dealer.
The good news you’re not getting, and why.
There are plenty of wonderful investment opportunities available out there. But I’m assuming you’ve never heard of many of them.
Your realtor may not tell you, because many realtors are unfamiliar with these securitized products, and they aren’t licensed to sell them.
Most likely your CPA, even if she has “heard of them” will vaguely tell you “she doesn’t recommend them.” CPA’s are concerned about the potential liability that might be in store for them down the road.
Your attorney probably won’t tell you, because you’d have to pay him upfront for any legal team to consider sharing such ideas, and you likely wouldn’t know enough about it on your own to ask.
And finally, your wire-house broker isn’t likely to tell you about these programs because many of the sponsors of these programs have deals that are under $500 million, and that’s simply not enough “scale” for the big boys to bother with.
So I’m telling you now, so you’ll know about them, and maybe you’ll gain enough information to know who to ask about them for yourself, maybe save some money – or heaven forbid, Make a profit.
Here are three real estate programs, two that are old and one that’s relatively new. The two older vehicles have been around a long time but have new modernized wrappers or structures with them. They are:
DST (Delaware Statutory Trusts) for 1031 exchanges: Essentially a pre-packaged 1031 exchange.
Conservation easements for the creation of permanent open space and parks etc.
The third option, Qualified Opportunity Zone Funds– this one is new. These funds are focused on incentivizing investment flow into blighted areas.
All three of these are structured with a goal of solving or enhancing various investment goals and objectives, including tax advantages as well as socially responsible investing, which a lot of people are into these days.
As a savvy investor, you may have heard of one or all of them, but a vague thought of “I don’t quite know the ins and outs of them” might drift into your head. Suffice to say that each has its own specific risk/reward profiles, attributes, and blemishes, and even the least-informed investor can give you an opinion on the merits- or lack of them.
In case you haven’t noticed, I’m new to blogging, and in the future, I intend to deconstruct these options for the general public in my writings every week, at least as far as regulations allow. You don’t need to be an accredited investor to read my writings, but you may need one on your team to take advantage of some of the information I’ll be sharing.
Regardless, I’m hoping I can help the average investor get some great info on some potentially money-saving options their financial team may not be sharing, for various reasons.
If you have any comments or questions about these, or any other products out there you’re curious about, feel free to write to me at khughes@emersonequity.com, or visit my site at realestateDST.com.
Thanks for reading.
Kevin Hughes | CFP
www.realestateDST.com
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