RENT Magazine discusses the latest investing, legal, screening, and tech trends in the rental industry. Contributors include attorneys, tax experts, investors, and real estate influencers. Stay in the know and read RENT Magazine for FREE.
WHAT THE BIG BEAUTIFUL BILL MEANS FOR LANDLORDS
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FALL 2025
ARE YOU GUILTY OF NEGLIGENT HIRING?
A GAME-CHANGER FOR LANDLORDS HUGE TAX WIN:
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TIME IS RUNNING OUT TO CLAIM COVID EVICTION LOSSES
7 TENANT GIFT IDEAS TO BOOST RENEWALS THIS HOLIDAY
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THE BIG BEAUTIFUL BILL LANDLORDS SCORE HUGE VICTORIES IN TAX, LAWSUITS, AND LEASING
MAJOR VICTORY FOR LANDLORDS IN EMOTIONAL SUPPORT ANIMAL CASE PAGE 35
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THE OFFICIAL PUBLICATION OF THE AMERICAN APARTMENT OWNERS ASSOCIATION
AAOA.COM
TEAM VP Robbie Cronrod Editor in Chief
Alexandra Alvarado Contributing Editors Allen Artcliff-Cronrod Nancy Abrams Contributors Allen Artcliff-Cronrod Altom M. Maglio Amanda Han, CPA
CONTENTS
05 10 16 21 29 35 32 46 41
TIME IS RUNNING OUT TO CLAIM COVID EVICTION LOSSES
NEW TAX BENEFITS FOR REAL ESTATE INVESTORS
Ashley Wilson Brian Tulibaski Christian Walsh Dan Lewkowitcz David Lazarra Dwight Kay Frank Jachetta Grant Burwash Grant Roscoe J Scott Jason Malabute Jon Roosen
PREVENT ACCIDENTS AND LAWSUITS WITH BALCONY INSPECTIONS
5 INVESTMENT RISKS OF OIL AND GAS MINERAL RIGHTS
THE BIG BEAUTIFUL BILL: HOW TO GET YOUR CASH AND RECORDS READY FOR TAX SEASON
Joshua Christensen Kathelene Williams Kaylee McMahon Liz Roussel Luke LaHaye Mendy Minkowitz Mike Orlando Nancy Abrams Omid Ghanandiof Richard D. Gann, JD Yonah Weiss
THE RENTAL RADAR: KNOXVILLE, TN
MAJOR VICTORY FOR LANDLORDS IN EMOTIONAL SUPPORT ANIMAL CASE
THE ONE THING THE HOUSING BILL FORGOT AND WHY IT MATTERS TO LANDLORDS
TENANT DISPUTE? HOW TO GET HELP WITH AI
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Welcome to RENT! In this Fall issue of RENT , we take on the challenges rental owners and managers face and show how to avoid or handle them with ease. Learn how to head off fair housing lawsuits and costly evictions, both on the rise. We also dig into negligent hiring and why thorough background checks on property managers, contractors, and others can spare you liability. If trouble still strikes, see how AI-powered dispute resolution can help. Additionally, on the legal front, mctlaw reminds you there’s still time to recover COVID eviction losses from the federal government, and Adams & Reese shares a big win for landlords: emotional support animal fees are now allowed under specific circumstances. Financially, discover how to stay profitable as costs climb and renters fall behind. We highlight the new One Big Beautiful Bill and what it means for investors, bust seven rent collection myths, explore the risk of investing oil and gas mineral rights, and show you how to use 100% bonus depreciation to lower your tax bill. For something lighter, Rental Radar visits Knoxville, TN and we track celebrity moves from Brad Pitt to Jennifer Aniston. Need tenant gift ideas? Our Holiday Gift Guide has you covered. Happy Holidays from the staff at RENT . Here’s to a very peaceful and profitable 2026!
50 55 58 65 70 79 73 89 96 84
HUGE TAX WIN: A GAME-CHANGER FOR LANDLORDS 7 MYTHS ABOUT RENTAL COLLECTION AGENCIES THAT COST LANDLORDS MONEY
WHAT THE BIG BEAUTIFUL BILL MEANS TO LANDLORDS
RISING COSTS AND RISKIER RENTERS: HOW TO STAY PROFITABLE IN TODAY’S ECONOMY
CELEBRITIES ON THE MOVE
ARE YOU GUILTY OF NEGLIGENT HIRING?
7 TENANT GIFT IDEAS TO BOOST RENEWALS THIS HOLIDAY SEASON AVOID COSTLY EVICTIONS: PROVEN METHODS TO VERIFY TENANT INCOME
MORE TENANTS ARE SUING LANDLORDS: HERE’S WHY
NEXT-GENERATION BULK STREAMING FOR EVERY PROPERTY TYPE: A SATELLITE-FREE ENTERTAINMENT SOLUTION 5 INDUSTRY RISKS OF THE BIG BEAUTIFUL BILL
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Disclaimer: All content provided here-in is subject to AAOA’s Terms of Use . Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. AAOA recommends you consult with a financial advisor, tax specialist, attorney or other specialist who is able to properly advise you.
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TIME IS RUNNING OUT TO CLAIM COVID EVICTION LOSSES Landlords across the country bore an additional burden during the pandemic. While the CDC protected tenants from eviction with a nationwide moratorium, property owners were forced to bear the costs. Many still have not been repaid. There is a
legal path to compensation, but time is almost up. THE CDC EVICTION MORATORIUM: WHAT HAPPENED
In September 2020, the CDC issued an emergency order stopping landlords from evicting tenants who claimed financial hardship from COVID-19. This order remained in place until October 2021. The eviction moratorium was designed to slow the spread of COVID-19. But it came at a high
cost to landlords. Property owners were forced to house non-paying tenants for more than a year while also paying mortgages, taxes, insurance, and maintenance. Some landlords managed to hang on. Others lost properties, racked up debt, or suffered serious financial setbacks they’ve never recovered from.
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THE GOVERNMENT TOOK MY PROPERTY WITHOUT COMPENSATION
What many landlords don’t know is that the U.S. Constitution provides a remedy under the Fifth Amendment. When the government takes private property for public use, it must provide just compensation. That’s where “federal takings claims” come in. By freezing evictions, the government stripped landlords of their ability to control their own property. In legal terms, the CDC eviction ban “took” a core aspect of property ownership: the right to evict non-paying tenants. That gives landlords a constitutional basis to seek compensation.
BY FREEZING EVICTIONS, THE GOVERNMENT STRIPPED LANDLORDS OF THEIR ABILITY TO CONTROL THEIR OWN PROPERTY.
THESE CASES MUST BE FILED IN A SPECIAL FEDERAL COURT Eviction moratorium claims must be filed in the United States Court of Federal Claims, a court of national jurisdiction located in Washington, D.C. that handles lawsuits against the federal government. This court has jurisdiction to award money damages for the government taking private property. LAWSUIT SHOWS WHAT’S POSSIBLE FOR LANDLORDS SEEKING JUSTICE The attorneys at mctlaw are representing landlords in eviction moratorium takings cases in the United States Court of Federal Claims. Landlords represented by the firm have been forced to house non-paying tenants during the CDC’s eviction ban. Our legal team holds the federal government accountable for taking away private property rights without compensation.
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THE WINDOW TO FILE FOR COMPENSATION IS CLOSING The deadline to file a claim is approaching fast, and once it passes, there’s no second chance. Preparing an eviction moratorium takings claim requires time to gather documents, calculate financial losses, and file in the federal court, all before the window closes. Waiting too long could mean permanently giving up your right to compensation.
WAITING TOO LONG COULD MEAN PERMANENTLY GIVING UP YOUR RIGHT TO COMPENSATION.
WHAT COUNTS AS A “TAKING”? Not every landlord will qualify for compensation. But you may have a case if you were forced to house tenants who did not pay during the CDC moratorium, and you can show that you lost income as a result. The eviction moratorium affected:
• Individual landlords and small-scale property owners
• Apartment complex owners
• Mobile home park operators
• Housing providers of all sizes
If your tenants submitted the CDC’s Eviction Protection Declaration and you were legally prohibited from evicting them, you may have a claim for money damages.
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WHAT YOU’LL NEED TO GET STARTED
To file a claim, you’ll need to provide documentation showing your losses. This includes:
Lease agreements in place during the eviction moratorium (Sept. 2020 – Oct. 2021)
Documentation showing missed or partial rent payments
Copies of CDC Eviction Declarations received from tenants
Financial documents showing your losses
WHY THIS MATTERS
The federal government made a choice to impose the costs of a public health emergency on private landlords, many of whom were already struggling. While tenants got protection from the US government, landlords were expected to bear the burden with no help and no compensation. Filing a takings claim is about more than just money. It’s about fairness. It’s about holding the government accountable for using your private property for public benefit without paying for it.
THERE’S STILL TIME, BUT NOT MUCH
The attorneys at mctlaw have spent decades litigating in the U.S. Court of Federal Claims. We are one of the few law firms in the country with deep experience in this area, and we are actively helping landlords prepare and file claims related to the eviction moratorium before time runs out.
Find out if you qualify with a free case review. Visit our firm at https://www.mctlaw.com/ federal-takings/eviction-moratorium/ or call us at 888-720-8685.
ALTOM M. MAGLIO Attorney mctlaw
Altom Maglio is a founding partner of mctlaw, a national litigation firm that represents clients in lawsuits against the federal government. He is a past president of the Court of Federal Claims Bar Association and serves on the Court’s Advisory Council and the Takings and Tribal Claims Subcommittee.
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NEW TAX BENEFITS FOR REAL ESTATE INVESTORS Signed into law on July 4, 2025, the One Big Beautiful Bill Act brings forward a suite of tax reforms that significantly impact real estate investors, rental property owners, and long- term wealth planners. It blends fresh incentives with the continuation of core tax strategies, reinforcing real estate’s status as a tax-advantaged asset class.
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QUALIFIED OPPORTUNITY ZONE FUNDS (QOZFS): DRIVING INVESTMENTS INTO UNDERSERVED COMMUNITIES
• Purpose & Mechanism Investors can defer recognized capital gains by reinvesting them into a Qualified Opportunity Fund (QOF), which invests in designated low- income neighborhoods. • Benefits Over Time º A 10% basis step-up after five years reduces the deferred gain amount. º Holding for 10 years or more allows the investor to step up the basis to fair market value and permanently exclude appreciation from taxation (IRS). • Economic Intent Intended as a catalyst for community revitalization, QOZs are explicitly designed to spur economic development and job creation in underserved areas (IRS). • Act Enhancements The Act solidifies the program by: º Making it permanent º Introduces rolling five-year deferrals º Allows a 10% basis step-up (already in place) º Establishes Rural Opportunity Zone Funds with a generous 30% basis step-up and relaxed improvement criteria. º Preserves the 10–30 year tax-free appreciation benefit as a long-term incentive. The Opportunity Zone program, created under the Tax Cuts and Jobs Act (TCJA), encourages private investment into economically distressed areas in exchange for capital gains tax benefits.
These enhancements aim to attract more patient capital while balancing urban and rural investment needs.
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THESE PROVISIONS OFFER POWERFUL TOOLS TO OFFSET INCOME IN A SINGLE YEAR, ACCELERATING TAX SAVINGS.
BONUS DEPRECIATION & SECTION 179: ACCELERATING TAX DEDUCTIONS
• Section 179 Expensing Allows immediate deduction of the cost of qualified property (equipment, software, and certain real estate improvements) in the year placed in service. It’s optional and replaces standard capital depreciation if taken. Recent IRS limits for 2025 set the cap at $1.25 million , phasing out after expendable costs exceed roughly $3.13 million (The Tax Adviser, IRS). • Bonus Depreciation Enables accelerated cost recovery by deducting a percentage of qualifying property in its first year. Under the new law, 100% bonus depreciation returns permanently for assets acquired and placed into service after January 19, 2025, reviving the full immediate deduction phased out Depreciation accelerators remain a cornerstone of strategic tax planning for property owners and business investors.
under earlier law (Plante Moran). i • How They Work Together
Section 179 is flexible and applied asset by asset, while bonus depreciation applies more broadly. Investors typically start with Section 179 (to meet or reduce taxable income), then apply bonus depreciation to remaining property costs (nationalfunding.com).
For real estate investors using 1031 exchanges, particularly via DSTs, these provisions offer powerful tools to offset income in a single year, accelerating tax savings.
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STATE AND LOCAL TAX (SALT) DEDUCTION: RELIEF FOR HIGH-TAX STATE FILERS
• Expanded Cap (2025–2029) The Act raises the SALT cap to $40,000 for single and joint filers, with annual 1% inflation adjustments through 2029. Without renewal, the cap reverts to $10,000 in 2030 (Thomson Reuters Tax). • Phase-Out The benefit phases out for filers above $500,000 MAGI in 2025 (and similar thresholds in later years), with the cap dropping fully back to $10,000 past $600,000 (Fidelity). • Who Benefits Most This change may sway more high-tax state residents, particularly those in California, New York, and New Jersey, to itemize deductions again. However, critics note the provision is regressive and primarily benefits upper-middle and upper-income filers (taxpolicycenter.org). The SALT deduction has historically been limited to $10,000, creating heavy burdens for taxpayers in states with high state income and property taxes.
This extended SALT relief often bolsters residential real estate’s attractiveness by enabling higher deduction thresholds for homeowners and investors alike.
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PRESERVED FOUNDATIONS: CORE TAX TOOLS INTACT Beyond new incentives, the Act maintains many foundational strategies vital to investor planning: TAX INCENTIVE UPDATE Oil & Gas Intangible Drilling Costs 20% Qualified Business Income (QBI) Deduction Estate & Gift Tax Exemption Long-Term Capital Gains Brackets Federal Income Tax Brackets 1031 Exchanges
Remain fully deductible. Preserved with updated phaseout ranges. Increased to $15 million in 2026. 15% and 20% thresholds remain unchanged. No modifications. All rules and benefits upheld. Fully preserved. Continues to shield unrealized gains from estate taxation.
721 Transfers into UPREITS Step-Up in Basis at Death
• Long-term tax deferral and exclusion via QOZFs • Accelerated cost recovery through bonus depreciation and Section 179 • Expanded SALT relief • Preservation of traditional deferral tools like 1031 exchanges, investors can optimize both immediate deductions and long-term wealth transfer WHY IT MATTERS FOR INVESTORS Investors, especially in rental real estate and private placements, now face a tax landscape with more flexibility, certainty, and opportunity . By combining:
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Neutral Source Links for Readers • QOZF Mechanics IRS Frequently Asked Questions and Investment (Wikipedia, wellsfargo.com, IRS, iCapital) • Depreciation Tools Comparisons & Current Limits for Section 179 and Bonus Depreciation (nationalfunding.com) • SALT Deduction Overview Tax Code History, Expanded Cap Details, Income Phase-Outs, and Distributional Impacts (Thomson Reuters Tax)
FINAL THOUGHTS
Setting aside the politics of budgeting, the One Big Beautiful Bill Act successfully combines permanence for proven tax strategies with new growth incentives. Whether seeking short- term deduction maximization or long-horizon wealth planning, real estate remains among the most tax-efficient investment avenues, now with even stronger tools and clarity for the years ahead. For more information about passive real estate investments and 1031 exchanges, please call 1031 Capital Solutions at 1-800-445-5908 or visit our website, 1031capitalsolutions.com.
THE ONE BIG BEAUTIFUL BILL ACT SUCCESSFULLY COMBINES PERMANENCE FOR PROVEN TAX STRATEGIES WITH NEW GROWTH INCENTIVES.
RICHARD D. GANN, JD Managing Partner 1031 Capital Solutions (800) 445-5908 1031CapitalSolutions.com
Richard D. Gann has been a member of the State Bar of California since 1997. Managing Partner of 1031 Capital Solutions and co-author of the book, How to Retire from Being a Landlord .
i New property for which construction begins after Jan. 19, 2025, but before Jan. 1, 2029, and placed in service before Jan. 1, 2031. This information is for educational purposes only and does not constitute direct investment advice or a direct ofer to buy or sell an investment, and is not to be interpreted as tax or legal advice. Securities ofered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services ofered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products ofered through Concorde Insurance Agency, Inc. (CIA). 1031 Capital Solutions is independent of CIS, CAM and CIA.
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PREVENT ACCIDENTS AND LAWSUITS WITH BALCONY INSPECTIONS When balconies and other Exterior Elevated Elements (EEEs) fail, the fallout is brutal: loss of life, years of litigation, soaring premiums, and stalled projects. The good news? Nearly every horror story shares the same villains, e.g., hidden moisture, decay, poor waterproofing, and missed maintenance, all of which can be caught early by a professional inspector. Below, we translate high-profile cases into actionable steps for California owners, HOAs, and property managers deciding how to prioritize inspections this year. WHAT THE LAWSUITS KEEP TEACHING US Recent and historic failures show the pattern:
LOCATION YEAR
CASUALTIES
PAYOUT / VERDICT
Berkeley, CA San Francisco, CA Montgomery, AL
2015 1998 2012 2003 2021 1992 2011
6 dead, 7 critically hurt 1 dead, 1 permanent brain injury 8 injured 13 dead, 57 injured ~9 injured
≈ $20 M+ (partial + confidential) $12.39 M jury award > $20 M + $250 K punitive ≈ $16.6 M global settlement No suits (yet)
Chicago, IL Malibu, CA Malibu, CA Chicago, IL
2 dead, ~29 injured 1 catastrophic injury
No suits reported $4.5 M settlement
These snapshots, compiled from recent landlord/industry coverage underline the same root causes: water intrusion, hidden rot, overloaded or compromised members, and aging waterproofing.
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WHY CALIFORNIA CAN’T AFFORD TO WAIT
If you operate in California, you’re already inside a defined regulatory framework:
SB721 (Apartments): Requires inspections of EEEs in multifamily (non-condo) buildings. Initial compliance was required by January 1, 2025 , with ongoing cycles thereafter. If you missed that window, you should prioritize scheduling and documenting corrective actions now.
SB326 (Condos/HOAs): Requires periodic visual inspections of EEEs by a licensed structural engineer or architect, with a written report to the board and inclusion in the reserve study at least once every nine years.
Bottom line: Regulators and insurers all require that you prove the structure is safe, prove you’re maintaining it, and prove you’ll remediate on a defined timeline.
THE LITIGATION MATH
• Inspection & repair dollars spent early are minimal when compared to seven- and eight-figure settlements after a failure. • Documentation wins cases (or prevents them): photo logs of waterproofing, written tenant notices, signed board approvals, contractor close-outs, and re-inspection records. • Delays compound liability: once a hazard is documented, inaction is what juries and risk managers remember.
DELAYS COMPOUND LIABILITY: ONCE A HAZARD IS DOCUMENTED, INACTION IS WHAT JURIES AND RISK MANAGERS REMEMBER.
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WHAT INSPECTIONS ACTUALLY CATCH (BEFORE LAWYERS DO) • Moisture ingress & rot concealed behind stucco or cladding • Failed/compromised waterproofing at balcony edges, door thresholds, and penetrations • Corroded connectors & hardware (loss of section) • Over-spanned or overloaded members, damaged rails/guard systems • Poor prior repairs (patches that trap moisture and accelerate decay) Each of these can be identified during a qualified EEE inspection and prioritized into immediate, short- term, and long-term repairs, mapped to code and manufacturer guidance.
YOUR 2025 ACTION CHECKLIST
Confirm your category (SB 721 for apartments vs. SB 326 for HOAs) and building list. Schedule a qualified inspection (engineer/architect for HOAs; qualified EEE inspector for apartments). Create a documentation trail: work orders, tenant notices, photo/video logs, board minutes, and close-out reports. Budget the fix-forward: separate immediate hazards from planned lifecycle repairs— tie to your reserve study (HOAs). Communicate early: tenants and boards respond to clarity about what’s being inspected, when, and how access is handled. Re-inspect repairs and update your records; store everything centrally for lenders, insurers, and future boards.
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THE MOST EXPENSIVE “REPAIRS” AREN’T STRUCTURAL, THEY’RE VERDICTS AND SETTLEMENTS THAT FOLLOW.
IF YOU ONLY REMEMBER ONE THING
The most expensive “repairs” aren’t structural, they’re verdicts and settlements that follow preventable failures. The cases above exist precisely because routine inspections didn’t happen soon enough, or red flags weren’t acted on quickly.
READY TO REDUCE RISK?
Book a professional EEE inspection: We’ll scope, inspect, document, and map your next steps. Prefer a guided walkthrough first? Join DrBalcony’s free daily webinar (11am PT) for a 60-minute brief on 2025 updates, timelines, and documentation best practices.
OMID GHANANDIOF Co-Founder DrBalcony (805) 312-8513
Omid boasts over ten years in tech engineering leadership. His strategy and innovation have propelled company expansion. As the creator of the “DrBalcony” app and innovative seismic devices, Omid holds patents along with master’s degrees in Marketing and Industrial Management.
Notes & sources: Selected lawsuit facts and payouts compiled from landlord-industry coverage; some settlements are partial or confidential and reported as approximations. Regulatory summaries based on published overviews of SB 721 and SB 326; always consult your local authority and counsel for site-specific requirements.
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The CDC forced you to house non-paying tenants during the COVID eviction moratorium. The United States Constitution requires the federal government to provide just compensation if it deprived you of the use of your property. COVID EVICTION MORATORIUM LOSSES?
Now it’s time to recover what you lost. File for compensation now Free legal consultation to qualify Pay no legal fees
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Contact Us (888) 952-5242
PAGE 20 OFFICES: WASHINGTON, D.C. | SARASOTA, FLORIDA | SEATTLE, WASHINGTON
5 INVESTMENT RISKS OF OIL AND GAS MINERAL RIGHTS Kay Properties has long believed that certain asset classes are too risky for many 1031 exchange investors. Perhaps at the top of the list of these is the oil and gas production/mineral rights asset class. While it is true that oil and gas mineral rights have long attracted investors with the promise of outsized cash flows (often touting 10% or more), it is also true that beneath the allure of potential high returns lies a highly speculative and volatile investment class.
Unlike traditional investment, real estate, such as industrial net lease properties, and mineral rights are subject to risks that can be difficult, if not impossible, to quantify accurately. For many investors, this can translate into much lower cash flows than the oil company projected and
potentially include the total and permanent loss of capital. So, what exactly are some of the risks associated with oil and gas production and mineral rights? Six specific areas pose extreme risk to investors.
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COMMODITY PRICE VOLATILITY AND THE IMPACT TO 1031 EXCHANGE INVESTORS’ CASH FLOW
RISK #1
The most obvious risk is the direct exposure to oil and gas prices, which are notoriously volatile. Investing in a mineral rights offering that is trading at $100 a barrel looks like a good investment. However, the same offering can quickly become economically unfeasible when prices fall to $50. Unlike properties with long-term leases to credit tenants, mineral rights do not offer predictable cash flow. Instead, revenue is entirely dependent on commodity prices set by global markets beyond an investor’s control.
UNLIKE PROPERTIES WITH LONG-TERM LEASES TO CREDIT TENANTS, MINERAL RIGHTS DO NOT OFFER PREDICTABLE CASH FLOW.
PRODUCTION DECLINE AND RESERVE UNCERTAINTY AND HOW THIS CAN DECREASE CASH FLOW TO 1031 EXCHANGE INVESTORS
RISK #2
Even when drilling is successful, oil and gas wells follow a steep decline curve: production is strongest in the first few months or years and then falls off sharply. Forecasting long-term returns requires accurate reserve estimates, which are inherently uncertain. Overstated reserves or disappointing well performance can leave investors with dramatically lower distributions than expected. The main reason why an investor in a 1031 exchange would even consider investing in mineral royalties is because of the high cash flow stated. However, the reality often is much worse than expected.
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RISK #3
OPERATOR RISK
Mineral rights owners are typically passive. They rely on exploration and production (E&P) companies, that is, the operators, to drill, extract, and market hydrocarbons. There are numerous variables associated with engaging in these types of operations. For example, if the operator delays drilling, shifts focus to other acreage, or suffers financial distress, mineral rights owners have no recourse. Operators frequently declare bankruptcy during downturns, leaving mineral rights holders stranded. Without an operator drilling on your acreage of mineral rights, you will receive no distributions or cash flow. This is a 1031 exchange risk that many are unaware of.
RISK #4
GEOGRAPHIC AND GEOLOGICAL RISK
Not all acreage is created equal. A few hundred yards can separate highly productive shale formations from uneconomic rock. Investors in mineral rights often lack the technical expertise to evaluate geology and drilling potential. Worse, they may be reliant on aggressive projections from brokers or promoters who profit whether wells get drilled or not.
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RISK #5
REGULATORY, ENVIRONMENTAL, AND ESG HEADWINDS
For decades, the oil and gas industry has faced significant regulatory and political pressure. Typically termed “ESG,” or Environmental, Social, and Governance influences have increased restrictions on everything from drilling permits to carbon emissions targets. As the ESG-focused capital markets continue to influence investors’ motivations, institutional investors continue to divest from the fossil fuel industry. This shift creates significant long- term uncertainty for mineral rights, calling their future political support and economic viability into doubt.
RISK #6
ILLIQUIDITY AND VALUATION CHALLENGES
Unlike publicly traded stocks or even certain real estate investments, oil and gas mineral rights are incredibly illiquid. There is no open, transparent exchange, and therefore valuations are very subjective. Even worse, often these valuations are based on aggressive (and sometimes unrealistic) assumptions about drilling schedules and commodity prices. Investors who need to exit early are likely to do so at a steep discount, if they can find a buyer at all.
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COMPARISON TO TRADITIONAL REAL ESTATE Many investors make the mistake of equating mineral rights to traditional real estate ownership. While both involve "land," the risk profile is entirely different. Real estate offers contractual leases, tangible improvements, and predictable rental income potential. Mineral rights, by contrast, represent speculative exposure to drilling activity, commodity prices, and the whims of energy operators. In other words, mineral rights are far closer to a leveraged bet on energy futures than to a stable income-producing investment.
MINERAL RIGHTS ARE FAR CLOSER TO A LEVERAGED BET ON ENERGY FUTURES THAN TO A STABLE INCOME-PRODUCING INVESTMENT.
CONCLUSION
Yes, some oil and gas mineral rights can sometimes generate significant profits if purchased at the right price, in the correct location, and at the perfect time. However, for most investors, the risks far outweigh the potential rewards. Extreme volatility, steep production decline curves,
operator dependence, and illiquidity make mineral rights among some of the riskiest 1031 exchange investment vehicles available today. For investors seeking the potential for predictable income and stability, mineral rights are a speculative gamble rather than a sound strategy.
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CONSIDERATIONS FOR 1031 EXCHANGE INVESTORS A particularly concerning trend is the number of 1031 exchange investors, many with no prior experience in the oil and gas business, who are persuaded to place their exchange proceeds into mineral rights instead of traditional real estate, such as apartments, shopping centers, or industrial warehouses. In doing so, they take on an extraordinary level of risk that they often do not fully understand.
Compounding these risks, many oil and gas royalty and syndication sponsor companies that 1031 exchange and direct investors have invested in over the years have ultimately ended in bankruptcy, inferior investor returns, complete investor losses, and, in some cases, outright fraud. Most savvy 1031 exchange investors who have built their wealth exclusively through real estate will not, at the peak of their retirement years, suddenly pivot into high-risk oil and gas royalties that they have no prior experience with. Even though oil and gas syndication sponsors may dangle the promise of higher returns and significant cash flows, sophisticated investors will recognize that these promises can be illusory and carry substantial risk.
To make matters worse, some mineral royalty salespeople go so far as to advertise these investments as "guaranteed" or "liquid." This so-called guarantee is simply untrue. Mineral rights are neither guaranteed nor liquid. They are speculative, highly volatile, and extremely difficult to exit once purchased.
About Kay Properties Kay Properties helps investors choose 1031 exchange investments that help them focus on what they truly love in life, whether that be their children, grandkids, travel, hobbies, or other endeavors (NO MORE 3 T’s - Tenants, Toilets and Trash!). We have helped investors for nearly two decades exchange into over 9,100 - 1031 exchange investments. Please visit www.kpi1031.com for access to our team’s experience, educational library and our full 1031 exchange investment menu.
DWIGHT KAY Founder and CEO Kay Properties and Investments (855) 899-4597
Dwight Kay is the Founder and CEO of Kay Properties and Investments, one of the most experienced and knowledgeable investment firms in the country specializing in Delaware Statutory Trust (DST) and private equity real estate investments. Mr. Kay established Kay Properties with the emphasis on providing real estate investment options to high-net-worth clients looking for passive real estate ownership. Since its founding, Kay Properties has participated in more than $30 billion of DST 1031 investments.
* Diversification does not guarantee returns and does not protect against loss. * This material is not to be construed as tax or legal advice. There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily 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. Securities offered through FNEX Capital.
PAGE 26
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YOUR RENT COLLECTION AGENCY CLICK TO START A COLLECTION Or visit www.syncomcorp.net/property-management-collections Full-service rent & debt collection options No upfront fees with Contingency Collection Report unpaid rent as a collection on your tenant’s credit report Customize your recovery strategy: Flat Fee or Contingency Key Features for Property Owners & Managers:
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ADVERTORIAL
THE BIG BEAUTIFUL BILL: HOW TO GET YOUR CASH AND RECORDS READY FOR TAX SEASON This year’s tax season comes with a new element: the recently passed One Big Beautiful Bill, a federal tax package that makes several changes to deductions, credits, and filing rules. While the details will affect landlords differently depending on their situation, it’s important to know the landscape may look different than in years past. Every landlord’s tax situation is unique. Remember to consult your tax professional ahead of time, since these changes may affect how you file. What you can do now, however, is strengthen the parts of your business that you can control, such as organizing your cash and simplifying recordkeeping.
SEPARATE YOUR CASH BUCKETS EARLY
One of the simplest strategies landlords overlook is using separate accounts for different purposes. Just like you might keep a personal emergency fund, your rental business benefits from earmarked accounts:
Tax reserves: A dedicated account for estimated taxes or the annual property tax bill.
Operating expenses: Day-to-day cash flow for rent collection and routine expenses.
Capital improvements: Funds set aside for major repairs or upgrades.
Keeping these buckets separate means you’ll never wonder whether you’ve already set aside enough for taxes, it’s right there in its own account. Even better, you’ll develop a clearer picture of your true operating income since the tax money is off-limits.
How Crescent Can Help Crescent makes this simple by allowing landlords to open unlimited checking accounts under one login. That means you can create a “tax bucket,” a “maintenance bucket,” and an “operating account” without juggling multiple banks or spreadsheets.
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KEEP CASH WORKING WHILE YOU WAIT
Landlords often keep sizable reserves on hand “just in case.” That’s smart, but letting those funds sit idle is a missed opportunity. Parking cash in an account that earns interest while staying fully liquid helps you earn more without locking up funds. This isn’t just about extra income, it’s about offsetting expenses. Earning steady interest on your tax reserves can help cover bookkeeping costs or soften the blow of the big bill when it arrives.
How Crescent Can Help
Crescent offers the best of both worlds: the earnings of a high-yield savings account*, paired with the liquidity and flexibility of checking. Your reserves continue to grow while remaining available the moment you need them.
AUTOMATE YOUR PAPER TRAIL
Another stressor at tax time is finding and organizing records, including receipts from vendors, proof of payments, rent deposits, and expense tracking. Manual bookkeeping makes this harder than it needs to be. Consider tools that automatically log every payment, bill, and transfer in real time. The advantages add up quickly:
Fewer missing receipts: Each transaction creates its own timestamped record.
Cleaner categories: Payments can be tagged by vendor or property, saving hours during tax prep.
Easy exporting: When it’s time to reconcile with your CPA, you can quickly download clear statements instead of sifting through paper.
How Crescent Can Help
With Crescent’s bill pay, invoicing, and real-time transaction tracking, landlords get a built-in digital paper trail. Every expense and payment is recorded and organized automatically with no shoebox of receipts required.
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MAKE YEAR-END RECONCILIATION SIMPLER
Imagine logging in on January 2nd and being able to see, in a single dashboard, exactly how much you earned, how much you spent, and how much is set aside for taxes. That’s the payoff of setting up smart systems ahead of time. With your cash buckets in place and transactions tracked in real time, preparing for tax season becomes much less stressful. Instead of scrambling to pull everything together, you’ll have organized records and statements at your fingertips.
How Crescent Can Help Crescent is designed to give landlords that exact clarity — unlimited accounts, automated tracking, and downloadable statements ready whenever you or your CPA need them.
FINAL TAKEAWAY The new Big Beautiful Bill may shift some of the rules for property owners, but the fundamentals of good preparation remain the same. By separating your cash reserves, putting idle funds to work, and leaning on automated recordkeeping, you can avoid the annual scramble and meet the “big beautiful bill,” whatever form it takes, with confidence.
And remember: always check with your tax professional to understand how new tax laws may impact your unique situation.
GRANT ROSCOE CEO and Founder Crescent Connect on LinkedIn
Grant Roscoe is the CEO and Founder of Crescent, a modern business banking platform built for landlords and operators who want more control, clarity, and return on their cash. Crescent helps users earn more on idle funds, automate their financial back office, and manage rental income like a real business—all from one simple dashboard. Since launching Crescent out of high school, Grant has scaled the company into a high-growth fintech, raising millions in venture funding and building a lean, mission-driven team focused on transforming how small business owners manage money.
*This account is an interest-bearing deposit account that earns interest based on a tiered rate structure. The interest rates and corresponding Annual Percentage Yields (APYs) are effective as of 8/3/2025 and are determined by the balance maintained in the account each day. Interest is compounded daily and credited monthly. Interest rates may change at any time at our discretion. See the Rate Sheet for the tiered rates. Crescent Financial Inc. is a financial technology company, not an FDIC-insured depository institution. Banking services are provided by Grasshopper Bank, N.A., Member FDIC.
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THE RENTAL RADAR
WHERE TO INVEST NEXT KNOXVILLE, TN
K noxville is one of the Southeast’s most stable rental markets, with multifamily occupancy consistently above 95% and rents rising more than 30% over the past five years. The city benefits from steady population growth, driven by the University of Tennessee and a diverse employment base that continues to attract new residents. Knoxville is home to the Sunsphere, a 266-foot tall golden tower built for the 1982 World’s Fair. The structure’s glass panels are layered with real gold dust, giving it its signature shine and making it one of the city’s most recognizable landmarks.
JON ROOSEN Senior Partner SVN Wood Properties
Let’s take a look at some other fun facts about Knoxville, TN
Median household income
$67k
191k
Population
With a surrounding metro population of 990k
Median age 37-40 yrs
Average 1-bedroom rental $1,200 (vs. $1,580 nat'l avg)
Vacancy rate 1.6% (vs. 9.2% nat'l avg)
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The largest home in Knoxville is the DeBusk Estate. It sits on 25 acres, 40k sq ft., and 48 rooms.
Walter Cronkite famously dubbed Knoxville the “Streaking Capital of the World” in 1974 when UT students would commonly streak down Cumberland Ave.
The birthplace of Mt. Dew in the 1940s.
Knoxville has more log homes than any other city east of the Mississippi River. This one is for sale for $410k.
Neyland Stadium at UT is named “Biggest and Best Stadium Ever Built” by Sports Illustrated.
It is the home of HGTV.
The Forensic Anthropology Center at UT has a “Body Farm”, where cadaver body parts are studied.
The trash dumpster was invented here by Knoxville mayor (1952-1955), George Dempster.
Known as the “Cradle of Country Music”, Dolly Parton started performing on Knoxville radio and TV at the age of 10.
Hank Williams Sr. spent his last night alive at Knoxville’s Andrew Johnson Hotel on 12/31/52. He died the following day.
Named after Henry Knox, the first Secretary of War for the US. Yes, Fort Knox is also named after him.
Philip John “PJ” Clapp, otherwise known as Johnny Knoxville, is from here.
Mary Costa, the voice of Sleeping Beauty, is from here.
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MAJOR VICTORY FOR LANDLORDS IN EMOTIONAL SUPPORT ANIMAL CASE Are you an apartment owner or landlord who has received a pet fee waiver request due to a claim regarding an emotional support animal (ESA), and you felt obliged to grant it, no questions asked? Well, not so fast. In a recent landmark victory for a housing provider in Henderson v. Five Properties LLC, U.S. Eastern District of Louisiana Judge Sarah Vance held that a tenant with an ESA seeking to have her landlord waive a generally applicable animal fee was required to prove that the waiver was necessary for her to use and enjoy her home. In other words, the landlord did not have to automatically waive the animal fee for a tenant with an ESA under the Fair Housing Act (FHA).
This is the first decision in the country to squarely address this issue of importance to housing providers who are subject to the FHA, and it rejects the notion that guidance issued by the U.S. Department of Housing and Urban Development (HUD) always requires housing providers to waive pet fees for people with ESAs. For years, guidance from HUD, the Department of Justice (DOJ), and others have maintained that housing providers must waive fees whenever someone claims they are disabled and need a service or assistance animal. Period. Though not actually the law, this idea was perpetuated
through Internet websites that have profited from promoting the sale of ESA prescriptions by advertising that purchasers may save money by avoiding animal fees. This federal court ruling clarifies that the analysis does not begin and end with the delivery of an ESA letter from a tenant to a landlord. Instead, tenants seeking fee waivers must prove they need the animal and that their request is reasonable under the circumstances. Judge Vance’s ruling provides guidance to landlords about how to assess the need for and reasonableness of waiver requests.
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TENANTS SEEKING FEE WAIVERS MUST PROVE THEY NEED THE ANIMAL AND THAT THEIR REQUEST IS REASONABLE.
THE LEGAL BREAKDOWN OF A FEDERAL COURT RULING IN LOUISIANA In Henderson v. Five Properties LLC, the case involved a plaintiff’s request for a reasonable accommodation under the FHA and Louisiana Equal Housing Opportunity Act (LEHOA), specifically seeking a waiver of a $400 animal fee
2020 Notice, both of which suggested, and have been interpreted to mean, that housing providers can never charge pet fees for people with ESAs. Historically, the Chevron doctrine required courts to defer to agencies’ statutory interpretations if they were reasonable. That changed when the U.S. Supreme Court eliminated Chevron deference in Loper Bright Enterprises v. Raimondo. Some courts gave this agency guidance deference, but Judge Vance determined the guidance was not entitled to deference or even respect. As the U.S. Supreme Court recently confirmed in in Loper Bright Enterprises v. Raimondo it is the role of the courts, not agencies, to interpret constitutional and statutory provisions and agency guidance is not law. Moreover, agency guidance is only entitled to respect if it has the power to persuade. Judge Vance found the HUD Notice “unpersuasive” because the cases cited within the Notice did not support HUD’s position and because the Joint Statement was not thorough and had no reasoning to evaluate.
for her dog, which she claimed was an ESA. The defendants’ apartment complex allows animals, so there was no issue with the dog living there. The only dispute was whether the defendants had to waive the fee they charged all tenants just because the plaintiff had an ESA. Adams & Reese successfully represented the housing provider, and we argued that the FHA does not say housing providers must waive animal fees for ESAs. It only says they must make reasonable accommodations that are necessary for disabled people to use and enjoy their homes equally. The plaintiff, represented by the Louisiana Fair Housing Action Center, argued that it is always necessary to waive animal fees for people with ESAs to afford them an equal housing opportunity. HUD and the Department of Justice (DOJ) issued a 2004 Joint Statement and HUD issued a
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THE JUDGE CONCLUDED THAT WHETHER SUCH ACCOMMODATION IS REQUIRED IS A FACT-SPECIFIC, CASE-BY-CASE DETERMINATION.
Judge Vance rejected the argument that landlords must always waive fees for tenants with ESAs. Instead, she concluded that whether such accommodation is required is a fact-specific, case- by-case determination.
Judge Vance recognized that a fee waiver is only necessary if it is indispensable and essential to achieve ameliorative effects of the tenant’s disability.
Whether a fee waiver is reasonable depends on factors such as:
The amount of fees imposed, The relationship between the amount of fees and the overall housing cost, The proportion of other tenants paying such fees, The importance of the fees to the landlord’s overall revenues, and The importance of the fee waiver to the handicapped tenant.
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JUDGE VANCE FOUND THE PLAINTIFF FAILED TO PROVE SHE NEEDED A FEE WAIVER BECAUSE SHE DID NOT PUT FORWARD ANY EVIDENCE TO DEMONSTRATE THAT WAIVING THE FEE WOULD ALLEVIATE THE EFFECTS OF HER DISABILITY.
Ultimately, Judge Vance found the plaintiff failed to prove she needed a fee waiver because she did not put forward any evidence to demonstrate that waiving the fee would alleviate the effects of her disability and the record showed the plaintiff could afford the fee, particularly if given the option to pay in installments.
Judge Vance also found the plaintiff failed to demonstrate a genuine issue of material fact as to the reasonableness of her request considering the fee was:
A little under 3% of the total cost of the housing, Animal fees are relatively typical for leased apartment buildings in which animals are allowed, and The plaintiff failed to come forward with evidence about the importance of the animal fee to the defendants’ overall revenue.
HUD WITHDRAWS FAIR HOUSING GUIDANCE DOCUMENTS Following Judge Vance’s ruling, the Office of Fair Housing and Equal Opportunity (FHEO) withdrew the HUD Notice pursuant to Executive Order 14219 of February 19, 2025 (“Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative.”) The HUD Withdrawal Notice explained that while guidance is a common tool for agencies to advise the public, it can sometimes be used by agencies
to attempt to bind the regulated public without adequate accountability. It also stated that, in some instances, guidance promulgated by the FHAO may have adopted interpretations that are inconsistent with statutory text. Thus, for the time being, the Withdrawal Notice instructs that the HUD Notice should not be enforced or relied upon by HUD or stakeholders.
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