Risk management in investing is a multi-pronged approach to preserving investment capital by containing or managing the many factors that could lead to a loss.
When a property is sold, it creates a taxable event. If you profited from its sale, you’re on the hook for capital gains tax; however, some exclusions may apply.
Using a 1031 exchange to move from one investment property to another while deferring the tax liability on any capital gain is a useful tool for real estate investors who want to reinvest the proceeds into like-kind assets. The name “1031 exchange” comes from Section 1031, Title 26 of the Internal Revenue Code, which contains the appropriate language that allows taxpayers to exchange real estate assets held for investment.
The execution of a 1031 exchange is a complicated process, and the IRS rules are strict. The investor can manage parts of the transaction, but not others, and it would be wise to have guidance for the overall scenario. How much of the planning and selection you can handle on your own partially depends on your skillset.
Selling a rental property means freeing up capital, hopefully nabbing a tidy profit, and moving on to the next great opportunity. It also means paying taxes on those gains unless you have a plan to defer them.
Umbrella Partnership Real Estate Investment Trusts (UPREITs) are a way to gain the passive income potential of a real estate investment by exchanging an appreciating property into a REIT in return for units in the trust instead of selling it outright.
In a typical arrangement for a publicly traded Real Estate Investment Trust, or REIT, the trust is a general partner that holds and manages its assets through an operating partnership subsidiary. In this way, the REIT is the umbrella partnership that owns most of the Operating Partnership units. The balance of OP Units are held by limited outside partners who obtain their OP units in exchange for the contribution of real estate assets to the REIT pool.
If you google the term “single net lease,” you could find that very little content describing JUST the single net lease will pop up. The likely reason behind the lack of single net lease articles is because the single net lease arrangement isn’t very common. Still, as is the case with any contract between a property owner and tenant, it’s important to have an overview of all types of leases, whether they are prevalent or rare.
Whether you are 40 years from retirement or it is just five years away, there are things you can do to help you plan for your golden years.
Mention the term “net lease” to someone even remotely familiar with real estate contracts, and the first thing that might come to mind is “triple net.” Triple-net leases are definitely “visible;” the chances are pretty good that any quick-service restaurant on an outparcel, or stand-alone dollar store, or retail automotive supply store signed such a lease with a property owner.