“Wall Street” and “Main Street” became powerful metaphors during, and in the aftermath of, the Great Recession of 2007-2009. Experts suggest that the actions of large banks and investment firms (Wall Street) were responsible for that sharp economic downturn, which, in turn, negatively impacted the small businesses and individuals of Main Street.
Real estate crowdfunding is a topic that has garnered a good deal of attention in the past few years. Positioned as the channel that allows anyone to access an investment that previously had significant barriers to entry, crowdfunding is hailed for its ability to unlock the real estate market for the average investor. Through a simple internet transaction, investors can allocate money into real estate assets or investment funds that formerly were only available to well-heeled and well-connected investors. While Realized is similar to crowdfunding in that we also provide access to large commercial real estate investments and utilize the internet for marketing, that’s where the similarities end.
In Part I of this series, I explored the definitions of Cost Basis and Adjusted Basis as they related to real estate investments. As I noted in that article, certain real estate transaction costs and expenses can be included when determining the Cost Basis. In this article we’ll delve into the types of costs that are included in the original Cost Basis.
In Part I of this series on tax basis, I explored the definitions of Cost Basis and Adjusted Basis as they related to real estate investments. In Part II, we explored the types of costs included in the original Cost Basis. In this third and final article, we’ll look at what types of costs and expenses can affect the Adjusted Basis.
Credit tenants generally provide cash flow reliability. These are larger, usually, publicly-traded companies that have investor-grade bond ratings. While that might sound attractive to landlords, it’s important to fully understand what a credit tenant is and which risks they may introduce. In this article, we’ll go over both.
Cap rates are loaded ratios. Despite being one of the most commonly used metrics to evaluate and compare real estate investment opportunities, cap rates have their flaws and limitations. You have to unpack them to understand the value they are trying to represent. To gain a deeper understanding of cap rates, we’ll start by describing what they are and then move into comparisons.
One of the first questions, and frankly one of the most important, I typically ask real estate owners who are considering or are in the midst of a 1031 exchange is “what is your adjusted basis in the property being sold?” I dare say that 95 percent of the real estate owners I speak with on a daily basis don’t know the answer to this question.
Location, location, location. We’ve all heard it before and certainly the location of an investment property is a huge driver of the investment’s performance. While it may be easy to spot a “good” location, there are also some locational risks that are often overlooked. From the market the property sits in, to its location within a retail center, location is fundamental to determining why tenants, occupants, and customers are driven to a particular commercial or residential property. As you review and compare different real estate investment opportunities, here are some important factors to consider.
If you have ever purchased or sold real estate, you may have received or been granted a deed in the process. If it was a traditional transaction between unrelated parties, you probably came across what is called a general warranty deed, which provided you assurance as a buyer that the seller owned the property outright, or vice versa. However, it is possible that you have never handled or been issued a quitclaim deed. Although similar in purpose to a general warranty deed, quitclaim deeds have unique features that differentiate them.
Buying and selling real estate should be a fairly simple process. You buy it, it (hopefully) appreciates in value, then you sell it. However, there can be a capital gains tax attached to that profit, meaning your after-tax cash flow (ATCF) could take a hit.