A just-released survey from the National Association of Realtors (NAR)* confirms what we have been hearing from a growing number of our clients: a record number of residential property owners now believe this is the right time to be selling. Nationwide, the survey reported that 77% of homeowners either strongly or moderately think that now is a good time to sell their properties. Owners of properties in Western states where property appreciation has outpaced other regions reported 85% favorable views towards believing that this is a good time to sell.
“Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end,” stated NAR Chief Economist Lawrence Yun.
Rental Property Owners are Selling
Many rental property owners in highly appreciated areas have not seen their rental income rise as fast as their appreciation and are becoming more motivated to sell at today’s historically high prices and reinvest in areas where they can derive higher income. For example, in the greater San Francisco Bay area, many of our clients are reporting that net cash flow on their appreciated rental properties is less than 2% of total equity after all expenses. As an example, a recent analysis that we completed for a client revealed net annual cash flow of only $10,000 on a rental property currently valued at about $1,000,000 – or a net return of only 1%.
Through selling a rental property and reinvesting their appreciated equity in areas with more attractive cap rates, many rental property owners can potentially obtain 2X to 4X greater income. Furthermore, if they choose to invest in rental properties structured as a Delaware Statutory Trust (DST), they can further benefit by having the trustee/management firm take on management and loan responsibilities thereby relieving them of much of the hassle and liability of being a landlord – while retaining the tax benefits of real estate investments. Selling appreciated rental properties and then reinvesting in higher yielding DSTs is becoming a preferable route for a growing number of rental property owners.
Older rental property owners who have realized favorable appreciation on their properties are the largest group who are exploring options to sell and reinvest for higher income.
If you are growing tired of managing tenants, maintaining your property, or dealing with growing rent control, and you want to enjoy greater income – then you are not alone. These are common frustrations that we hear from our clients regularly.
Those rental property owners who have children are also motivated to reinvest in properties that require less management and day-to-day responsibilities since their kids often have less interest in performing the added work that may accompany typical rental property investments.
We Can Help You Convert Appreciated Equity into Potentially HIgher Income
If you have appreciated rental properties and desire to generate greater income or transfer your appreciated properties to heirs, please contact our team members at First Guardian Group to explore your options. We are pleased to provide you with a no-cost analysis of your real estate assets and offer recommendations and options that may help you and your family better achieve your objectives. We can provide a “one-stop-shop” for assistance with 1031 Exchanges, a sale of rental properties, reinvestment of sales proceeds into potentially higher income producing properties – plus provide referrals to knowledgeable real estate tax advisors and legal and estate planning specialists.
Our firm has broad access to income property options throughout the US and can help you identify sub-markets and asset types nationwide that may better meet your needs. We can help you source properties in all common asset classes including multifamily, retail, medical, commercial – and even single-family rentals. We can also provide current market reports and obtain inputs from local market specialists through our nationwide network of real estate advisors.
Please call us at 866 398-1031 or send us an email at info@FirstGuardianGroup.com for more information or to schedule a no-obligation consultation.
* https://www.nar.realtor/sites/default/files/documents/2018-q3-home-survey-09-26-2018.pdf
BIO : Paul Getty
Paul Getty is a licensed real estate broker in the state of California and Texas and has been directly involved in commercial transactions totaling over $2 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student and senior housing.Paul Getty’s transaction experience includes buy and sell side representation, sourcing and structuring of debt and equity, work-outs, and asset and property management. He has worked closely with nationally prominent real estate brokerage and investment organizations including Marcus Millichap, CB Richard Ellis, JP Morgan, and Morgan Stanley among others on the firm’s numerous transactions.Paul Getty also maintains a broad network of active buyers and sellers of commercial real estate including lenders, institutions, family office managers, and high net worth individuals.
Prior to founding First Guardian Group/FGG1031,Paul Getty was a founder and CEO of Venture Navigation, a boutique investment banking firm specializing in structuring equity investments made by institutions and high net worth individuals. He possesses over 25 years of comprehensive worldwide business management experience in environments ranging from early phase start-ups to multi-billion dollar corporations. His track record includes participation in IPOs and successful M&A activity that has resulted in investor returns of over $700M.
Paul Getty holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. He is a member of Institute of Real Estate Management (IREM), a Certified Property Manager Candidate (CPM), and a member of the US Green Building Council.Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered representative with LightPath Capital Inc, member FINRA /SIPC .
Paul Getty is a noted speaker, author, and actively lectures on investments and sales and management related topics. He is author of The 12 Magic Slides ,Regulation A+: How the JOBS Act Creates Opportunities for Entrepreneurs and Investors , and Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST), available on Amazon and other retail outlets.
Disclaimer
This material is not intended as tax or legal advice so please do speak with your attorney and CPA prior to considering an investment. This material contains information that has been obtained from sources believed to be reliable. However, FGG1031, First Guardian Group, LightPath Capital, Inc., and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) and 1031 Exchange properties. These include, but are not limited to, tenant vacancies, declining market values, potential loss of entire investment principal.
Past performance is not a guarantee of future results: potential cash flow, potential returns, and potential appreciation are not guaranteed in any way and adverse tax consequences can take effect. The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. All financed real estate investments have a potential for foreclosure. Delaware Statutory Trust (DST) investments are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments. Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions. Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits.
IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, you should consult your tax and legal professional for details regarding your situation. Securities offered through registered representatives of LightPath Capital, Inc. Member FINRA / SIPC. FGG1031, First Guardian Group, and LightPath Capital, Inc. are separate entities.
DST 1031 properties are only available to accredited investors (generally described as having a net worth of over one million dollars exclusive of primary residence) and accredited entities only (generally described as an entity owned entirely by accredited individuals and/or an entity with gross assets of greater than five million dollars). If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney prior to considering an investment. You may be required to verify your status as an accredited investor. Member of LightPath Capital, Inc.