Syndication deals and any other real estate deal that involves partners will always have their challenges. Below I am going to go over the three kinds of partners to avoid in any real estate deal.
“It depends,” is a normal lawyer response to just about any question. So, it is no surprise that was a response recently when a client asked me, “When do we sell our property?”
At first, getting involved in real estate syndication might sound complicated and high-level — maybe even above the average investor’s pay grade. However, none of these assumptions are true.
In the real estate world, there are several ways to measure profits. Return on investment (ROI), capitalization rate (cap rate), and the 1%–2% rule — the list could go on. What are these different measurements and how do you use them?
In this short outline, I want to introduce you to commercial and residential real estate — they are similar but very different. For the purposes of this blog post, I want to focus on residential real estate and the kinds of rentals, how you rent those out, and what other ways to invest in real estate exist for you.
If you cannot identify and close on a 1031 exchange, then you may want to consider a DST. A DST is a Delaware Statutory Trust. These trusts allow passive, fractional ownership in real estate while qualifying as a “Like-Kind” exchange replacement property under Section 1031 of 26 USC.
Today’s market is red hot for those with inventory, but that creates a double-edged sword for the seller. On the one hand, a hard-earned profit is likely being made. On the other hand, inventory is low out there, and that creates a decision tree problem that many people are facing right now.
A 1031 exchange is a terrific tax tool for investors to plan around capital gains and depreciation recapture in real estate transactions. However, understanding the basis in a 1031 property exchange is not always straightforward.
Not all investors have money to invest. Yet, they offer other skill sets or values that make them an important part of the team. That being the case, finding the deal and closing on the deal can be miles apart if you can’t raise the money.
How should I hold my real estate investments, in an entity or in my individual name? This is the single most asked question I get as a lawyer. There is no “right” way to hold real estate and it is up to the individuals who are buying the real estate.