By Chelsea Shapiro, Sr. Broker
Seller Solutions: "I've sold my property... what now??"
We are frequently asked about post disposition investing and tax strategies, and the answers have become more complicated recently. Here's a few strategies that we've been diving into lately and have compiled resources for our seller clients:
Exchange into a DST (Delaware Statutory Trust): These count as a 1031 Exchange and often offer better returns and a hands-off investing experience. It is a ownership structure with multiple investors, but investors still maintain an undivided fractional interest in the holdings of the trust. The benefits include tax benefits just like other real estate investments, passive income potential, access to larger deals and asset classes that usually are not accessible to the average solo investor. We do not facilitate these deals inhouse at Sound Realty Group, but have relationships with several reputable companies who do. We’re happy to share more info on DSTs and/or connect you with exchange strategists who can go over the details more in depth.
Invest out-of-state: We've been tracking the best markets outside of WA to exchange into. Here’s our list of top 5 growth and recession-proof markets with cash flow opportunities:
- Ohio - Columbus and Cleveland
- Kansas City, Missouri
- Florida - Jacksonville, Tampa, Miami
- Birmingham, Alabama
- Myrtle Beach, South Carolina
We have an extensive network of out-of-state agents and brokers and have developed relationships with agents in each of these markets. We’d be happy to put you in touch with any of them and/or pass on details about deals they have shared with us in their markets. Here’s a short list of articles and data that helped us pinpoint these specific markets.
Seller Financing: a great way to spread out the cap gains tax and get an additional return on your equity. We’ve structured several deals that had either all or partial seller financing and there are so many creative options in this space that range from short term scenarios to notes lasting for several years. With higher interest rates it often creates a scenario where a buyer could enjoy a lower interest rate than what a bank will provide therefore enabling them to pay a bit more for the property. For the seller it means they can spread out their gains over more than one year and typically seller carried interest rates will be higher than returns they would see in other assets.