Have more money in hand as real estate investor
To understand how Diversified Investment Strategies can help you, as a real estate investor, we want to share a story with you! This is a real-life example of how Bryan Hakola, Founder and President of DIS, recently helped an investment couple.
The couple was in their late 70’s and had recently sold their six-unit apartment building for $1,750,000. They had owned this property for many years and owed approximately $150,000 against the property. The gross monthly income from the property was $7,875. However, their net was about $2,400 monthly after taxes, maintenance, repairs, mortgages, utilities and so forth.
Like many of the real estate investment owners we speak with, this couple was tired of dealing with tenants, toilets and taxes, the “3 T’s” of investment properties, and they felt like they were getting too old to properly manage the property. They also had lots of equity tied up that was not working for them. To make matters worse, they had no cash or liquidity. In fact, they were unable to pay some of their bills and had accumulated $21,000 in high-interest credit card debt and loans.
So, this couple had about a $2.5M net worth after working hard their entire lives, but had no cash, were stressed about paying bills and were still in need of income! Their initial plan was to pay the capital gains taxes, per their accountant, which amounted to approximately $600,000. This would have left them with about $900,000 of equity to put in the bank or reinvest.
Then they met with Bryan from DIS, whose plan was to satisfy the 1031 exchange and defer all of the capital gains taxes. Bryan pointed out that there are so many people who would dream of retiring with $600,000, but they were about to write a check to the government and throw that ample amount away!
So the question was, how could DIS preserve the wealth that this couple had created, create a comfortable income that meets their needs for the next three, five or 10 years out, and create immediate cash and liquidity needs to pass to the next generation?
This is the plan Bryan created, which met all of the goals and needs of the couple:
1031 Proceeds $1,500,000
Pay Down re-advance $500,000 (this will give them $215,000 cash out tax free, $270,000 invested in a “Zero Coupon” NNN offering (this is the liquidity piece)
National Income DST portfolio $250,000
San Antonio (multifamily) DST $300,000
Arlington (multifamily) DST $200,000
Net Lease DST portfolio $250,000 (all cash)
What did this plan and solution do for the couple?
- The couple was able to complete their 1031 exchange and pay no capital gains taxes. The equity was split among 13 properties.
- Stable credit tenants
- Long leases
- Diversification of tenants, geographic, lease expiration, sponsors
- Ability to increase rents to hedge against inflation while creating a consistent monthly income
- Liquidity- $215,000 of cash out of their exchange tax-free
- Zero capital gains tax
Are you ready to find out what Diversified Investment Strategies can do for you? Let us help you come up with a plan that allows you to keep as much of your hard-earned investment income as possible! Give us a call at any time.
Bryan Hakola
Diversified Investment Strategies
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