comfortably quantify such risks, the uncertainty will manifest itself in higher spreads and therefore, higher cap rates. Negative economic and regulatory changes in the Bay Area last year created much higher uncertainty for apartments than, say, in Phoenix or Austin or Jacksonville. As a result, spreads in those MSAs barely moved compared to San Francisco. Bottom Line In the current political environment, it would be highly optimistic to believe our historically low cap rates for apartments will remain unchanged for several years. The degree of any future increase depends on factors that are both national and local. If you suppose cap rates are likely to rise across all real estate types, then at least invest in suitable sectors that offer the chance to mitigate cap rates with potentially higher future income. Like institutionally operated apartments. 2. This does not constitute direct investment advice as individual circumstances and suitability vary. 2
Richard D. Gann, JD Managing Partner 1031 Capital Solutions (800) 445-5908 1031CapitalSolutions.com
Richard (Rick) Gann is an attorney, licensed real-estate broker, and general securities principal specializing in 1031 exchange solutions and he is co-author of the book “How to Retire from Being a Landlord”.
This is for informational purposes only, does not constitute as individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.
There are material risks associated with investing in DST properties and real estate securities including liquidity, 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, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to sell any securities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and attorney. Because investor situations and objectives vary, this information is not intended to indicate suitability for any particular investor. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM). 1031 Capital Solutions is independent of CIS and CAM.
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