Acquisitions with 1031s, DSTs, OZs, and eXp Commercial’s Support

Background

The world of commercial acquisitions can be complex, but with the right strategies and support, it can also be a lucrative one for investors. This article dives into some of the most common and effective acquisition techniques, including 1031 exchanges, Delaware Statutory Trusts (DSTs), Opportunity Zones (OZs), and explores how eXp Commercial empowers your success in these areas.

Understanding the Powerhouse Techniques:

• 1031 Exchanges: Often referred to as “Starker Exchanges,” these tax-deferred transactions allow investors to sell a qualified investment property and reinvest the proceeds into a similar property within specific deadlines, effectively deferring capital gains taxes.
• Delaware Statutory Trusts (DSTs): DSTs offer a chance to invest in commercial real estate through a fractionalized ownership structure. This allows participation in potentially high-value assets that might be out of reach for individual investors.
• Opportunity Zones (OZs): Created by the Tax Cuts and Jobs Act of 2017, OZs are designated areas where investment in qualified real estate can come with significant tax benefits, including potential capital gains tax deferral and elimination.

eXp Commercial: Your Acquisition Ally

At eXp Commercial, we go beyond simply connecting you with properties. Our team of experienced professionals provides comprehensive support throughout the acquisition process, including:

• Strategic Guidance: We help you identify the most suitable acquisition strategy based on your investment goals and risk tolerance.
• Market Expertise: Our in-depth knowledge of local and national markets ensures you make informed decisions.
• Streamlined Due Diligence: We navigate the complexities of due diligence, saving you time and resources.
• Expert Negotiation: Our skilled negotiators ensure you secure the best possible deal on your chosen property.
• Transaction Management: We handle the intricate paperwork and ensure a smooth closing process.

Beyond the Usual: Lesser-Known Techniques for Acquisition Success

While 1031s, DSTs, and OZs are powerful tools, there are other strategies to consider:

• Reverse 1031 Exchange: This is a complex strategy that allows you to identify a replacement property before selling your existing one. It involves a qualified intermediary holding the funds from the sale and using them to purchase the new property. Due to the complexities and tight timelines involved, reverse 1031 exchanges are less common and require specialized tax and legal guidance
• Sale-Leaseback Transactions: In a sale-leaseback, a company sells a property they own (often real estate) to an investor and then leases it back for a set period. This allows the company to access immediate capital while retaining control of the property for operations. Acquisitions specialists can help companies identify suitable investors and negotiate favorable lease terms.
• Mergers and Acquisitions (M&A): While often associated with businesses, M&A can also apply to commercial real estate. Acquisitions specialists can facilitate the merging of two or more commercial properties, or the acquisition of a company that owns commercial real estate. This can be a strategic move for companies looking to expand their portfolio or gain access to specific locations.
• Joint Ventures: Acquisitions specialists can help structure joint ventures between investors for co-ownership and co-management of commercial properties. This allows parties to share resources and expertise, potentially amplifying returns.
• Note Purchases: In some cases, acquiring existing notes (mortgages) secured by commercial properties can be a viable option. Acquisitions specialists can assess the risk profile of the note and negotiate its purchase at a discount, potentially generating a steady income stream.
• Portfolio Acquisitions: Instead of focusing on individual properties, acquisitions specialists can facilitate the purchase of entire portfolios of commercial real estate. This can be attractive for investors seeking diversification and economies of scale in management.
• Estate Sales: Acquisitions specialists with experience in estate planning can assist executors in the sale of commercial properties included in an estate. This can be a complex process with tax implications, and an acquisitions specialist can help navigate these challenges.
• Tenant-in-Common (TIC) Agreements: TICs enable co-ownership of real estate, offering some flexibility compared to DSTs.
• Like-Kind Exchanges: Similar to 1031 exchanges, but with a broader range of qualifying properties for reinvestment.
• Real Estate Investment Trusts (REITs): Invest in a diversified portfolio of commercial properties through publicly traded REITs.