How Gauging Real Estate Risk Differs from Gauging Stock and Bond Risk
You’ve heard it before, and we will continue to repeat it: There is no such thing as a risk-free investment. Yes, some investments carry a lower degree of risk. And, risk can be managed through due diligence, plenty of research, and self-analysis pertaining to risk tolerance. But the act of investing requires acceptance of risk.
What is a 457(b) Retirement Plan?
While most people are familiar with 401(k) retirement plans, and many have at least heard of a Roth IRA and the nonprofit sector 403(b) plans, the 457(b) has not received the same widespread attention. This relative anonymity is likely because these plans are among the least common of the defined-contribution retirement plans. 457(b) plans are IRS-approved employee retirement programs offered by some state and local government agencies and a select few nonprofit employers. (Those offered by nonprofits may also be found in section 457(k) and vary slightly from their (b) counterparts.)
What Does A Triple Net Lease Include?
The lease structure on a potential investment property means a lot in regards to how much skin you’ll have in the asset. Triple net leases are among the most popular lease agreements in commercial real estate because they shift responsibility for a property’s variable costs and operating expenses from the owner to the tenant.
Do I Need A Lawyer For A 1031 Exchange?
The 1031 exchange process can be complicated, especially for novice or first-time real estate investors. Completing a successful exchange requires strict adherence to deadlines and other IRS exchange provisions.
Why Would a Commercial Landlord Insist on a Triple Net Lease?
A triple net lease (NNN) benefits commercial landlords by reducing the potential risk that comes with a commercial lease. The triple net lease is a lease agreement between a tenant and landlord where the tenant agrees to pay all of the expenses of the property. These expenses include property taxes, property insurance, and maintenance, in addition to rent and utilities.
Government Accountability Office Weighs in on Qualified Opportunity Zones
Oversight and reporting concerns have been part of the Opportunity Zones program since it came into effect as part of the Tax Cuts and Jobs Act of 2017. The Brookings Institution’s 2018 report, “Learning from Opportunity Zones: How to Improve Place-Based Policies” decried the lack of “necessary data and defining criteria” when it came to targeting distressed communities under the program. In late 2019, Sen. Ron Wyden (D-OR) sponsored S.2787, the “Opportunity Zone Reporting and Reform Act.” The legislation focuses on Qualified Opportunity Fund (QOF) requirements, as well as modifications to the Qualified Opportunity Zones (QOZs). The bill was referred to the Senate finance committee, where it remains.
What is a 401(a) Retirement Plan?
While most people are familiar with the 401(k) retirement plan provisions, many are not as aware of the nearby section of the Internal Revenue Code in 401(a). While the (k) retirement plans are typically sponsored by private companies, a 401(a) is generally established by a non-profit organization, a non-federal government agency, or an academic institution. Sometimes these organizations will set up a 403(b) plan instead of a 401(a). In either case, the sponsoring organization can determine the eligibility requirements and compel participation, but there are differences.
Important Factors To Know When Investing In Commercial Real Estate
Investing in commercial real estate can be profitable but many factors come into play. Commercial real estate is property that can generate income and capital appreciation for the owner and includes any non-residential real estate. Examples of commercial real estate include retail space, office buildings, industrial buildings, and multi-family properties, among others.
1031 Exchange Into Delaware Statutory Trust: What Terms Should I Know?
A Delaware Statutory Trust (DST) is one of the most common investment methods when considering a 1031 exchange. Although Delaware is in the name, you can complete a DST investment anywhere in the United States. Neither the investor nor the property needs to be in Delaware. A DST is a pre-packaged investment on a property put together by a sponsor. After the sponsor does due diligence, negotiates lease terms, and takes other steps to put the package together, then they offer equity to investors. The trustees pool their 1031 exchange funds for the investment and then receive cash distributions if the property is profitable.
Risk and Rewards: All-Cash Versus Financing
Consider the following scenario. You meet a friend for lunch, and he is very excited about a real estate purchase on which he just closed. He is now the proud owner of a fully tenanted apartment building, located in a great part of town. Then he delivers the piece de resistance. “I paid all cash for it!” he announces. “This investment is practically risk-free!”
