Real Estate Advisory
How Elevation Wealth Partners advises investors with significant real estate holdings
For investors with sizeable personal and commercial real estate holdings, deciding whether to hold, sell, or exchange them is often a complex and time-intensive process involving many professionals. Elevation Wealth Partners has expertise in helping clients think strategically and holistically about their real estate holdings.
As part of our comprehensive wealth management services, Elevation Wealth Partners can advise you on a number of personal, commercial, and investment real estate matters. Such as:
- Minimizing taxes on the sale of real estate.
- Ways to transfer real estate to a family member while preserving as much of the tax benefits as possible.
- Exploring, understanding, finding, and evaluating 1031 exchanges, tax deferred exchanges, and Starker exchanges.
- Understanding different real estate entities and vehicles such as Limited Liability Corporations (LLCs), Limited Partnerships (LPs), Delaware Statutory Trusts (DSTs), and Tenants in Common (TICs).
- Understanding tax laws, such as Prop 19 in California.
- Reducing the burden of managing your real estate holdings by selling, exchanging, or diversifying.
- Understanding 721 exchanges, the enhanced liquidity they may provide, and which real estate investment companies currently offer so-called “UPREITs.”
When considering selling or exchanging a piece of commercial real estate, such as an apartment building, warehouse, home, or office building, there are many considerations investors must keep in mind:
Market Conditions:
Evaluate current market conditions and trends. Assess the local real estate market, including supply and demand, rental rates, vacancy rates, and overall economic conditions. Understanding the market will help you determine the optimal time to sell or exchange your property.
Property Valuation:
Obtain a professional appraisal or valuation of the property to understand its current market value. This will help you set a realistic asking price or determine the potential value of an exchange property.
Tax Implications:
Consider the tax implications of selling or exchanging the property. Capital gains taxes may apply to the profit from the sale. However, using a 1031 exchange (like-kind exchange) can defer paying capital gains taxes if you reinvest the proceeds into a similar property.
Financial Performance:
Review the financial performance of the property, including rental income, operating expenses, and net operating income (NOI). Determine how the property’s performance aligns with your investment goals and whether it continues to meet your financial objectives.
Property Condition:
Assess the condition of the property and any necessary repairs or upgrades. The condition of the property can impact its market value and attractiveness to potential buyers.
Legal and Regulatory Issues:
Ensure that all legal and regulatory requirements are met, including zoning regulations, building codes, and any tenant-related issues. Address any legal matters before proceeding with the sale or exchange.
Exit Strategy:
Define your exit strategy and investment goals. Determine whether selling or exchanging the property aligns with your long-term financial goals and investment strategy.
Financing and Debt:
Evaluate the impact of selling or exchanging on any existing financing or debt. Consider how the sale or exchange will affect your mortgage, loan balances, and overall financial position.
Marketing and Sales Strategy:
Develop a marketing and sales strategy to attract potential buyers or exchange partners. Consider working with a commercial real estate broker who specializes in the type of property you own.
Replacement Property (for 1031 Exchange):
If considering a 1031 exchange, identify suitable replacement properties that meet your investment criteria. Ensure that the replacement properties are like-kind and align with your investment goals.
Professional Advice:
Consult with professionals such as real estate brokers, appraisers, tax advisors, and legal experts to guide you through the process. Their expertise can help you navigate complex transactions and make informed decisions.
At Elevation Wealth Partners, we’ll help you think through these considerations and explore a strategy that aligns with your financial goals. From there, we can connect you with fellow real estate, legal, tax, lending, and brokerage professionals that will work with you to further explore and execute your desired outcome.
