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.
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