By Sebastian Moya, Associate, Cove Capital Investments, LLC
Real estate is the cornerstone to the retirement plans for many of our clients. When the time comes that a property has become management intensive, the tenants become too obnoxious, too much of the investors net worth is tied up in one single property in one single location as well as when the investor realizes that the return on their equity isn’t what it could be, selling the property and doing a 1031 exchange to defer capital gains taxes becomes a viable consideration. The “I don’t know what I would 1031 exchange into” is what keeps many people holding onto their properties for longer than they ideally would want to. At Cove Capital Investments, we offer an alternative to being in the same boat for longer than you feel you need to be.
After selling your investment property, capital gains taxes may come knocking on your door and take a significant portion of the equity you have worked so hard to build. Our Delaware Statutory Trust (DST) investments are a type of real estate investment that could potentially fit your situation. DSTs are a way to complete a 1031 exchange into replacement property investments that are completely passive investment. This means that you could potentially be receiving monthly distributions from a property you do not have to manage.
We believe the benefits to this could be immediate and speak for themselves. These DSTs are a true beneficial ownership in real estate in properties like single tenant net-leased assets (think a Walgreens pharmacy, FedEx distribution facility, Fresenius dialysis clinic), multifamily apartments, or self-storage facilities. A pillar of our business model is our belief in debt-free DST investments. When first acquiring real estate, it may have been that a typical thirty-year mortgage was used to begin the long road to building equity in a property and paying off the mortgage. Once that goal has been completed and investors own their property free and clear with no debt, why would you increase your risk profile by adding more debt at a different stage in life? For this reason, Cove Capital focuses on providing all-cash/debt-free DST investments for our clients.
This strategy is not for everyone. For those investors that are seeking outsized return potential the debt free strategy is not for you. Outsized return potential also come with a much higher set of risk factors. At Cove Capital, we are of the mindset that we a) want to help protect the principal of 1031 investors as much as possible by not using long-term debt and b) pursue a predictable durable stream of potential distributions.
For a list of our current debt free offerings for 1031 exchange and direct cash investments please register at www.covecapitalinvestments.com or call 1.877.899.1315.
This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. This email contains information that has been obtained from sources believed to be reliable. However, Cove Capital Investments, LLC, Growth Capital Services and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. This material is not intended as tax or legal advice. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances. Securities offered through Growth Capital Services. Member FINRA/SIPC. Cove Capital Investments, LLC and Growth Capital Services are separate entities.