Carnegie Wealth Management
Investment Real Estate Division
Let me go to work for you and find
Your Next Real Estate Solution
The Solution: Structuring & completing a 1031 exchange where the equity for the replacement property is substantially less than the taxes owed to the government from the foreclosure.
How it works: A low tax basis in a foreclosed property typically results from long-term ownership or from carrying a low basis from an earlier 1031 exchange.
Gain is recognized from a foreclosure since the event is deemed a sale by the IRS. The gain equals the amount of the deemed sale, less the adjusted tax basis (assuming non-recourse debt). Combined federal, state & local taxes can exceed 25% of the gain.
Defer the tax by giving the property back to the lender through a qualified intermediary, initiating a 1031 exchange. Use a deed in lieu of foreclosure to transfer the property.
Acquire a long term investment grade credit, net lease replacement property with credit tenant financing for around 10% equity.
This transaction cannot work using a 1031 exchange with property other than a long term, investment grade, net lease property with credit based financing, since too much equity would otherwise be required.
Summary: If your foreclosure is going to trigger a tax event you might want to look into a leveraged 1031 transaction to defer the tax triggered. The solution is often times considerably less than the check that you would otherwise be required to write to the IRS.
Definitions:
Triple Net Lease (NNN):
A lease in which the lessee pays rent to the lessor, as well as all taxes, insurance, and maintenance expenses that arise from the use of the property.
In a Double Net Lease (NN) the owner (you) are responsible for roof & building structure as well as some common area maintenance (mowing the grass). You'll see for example, that we offer some Dollar General stores on a Double Net basis. I'm comfortable with this with DG because with their newly built stores there is a one year manufacturer's warranty on roof & structure, AS WELL you'll typically find a 10-25 year warranty policy on the roof & structure. Anytime you look at a Double Net situation it's good to ask if the roof & building structure have warranty coverage.
FAQ's
What happens when I get to the end of the lease term and the tenant doesn't renew?
The first thing that you have to remember when you buy a NNN property is that you are NOT GETTING MARRIED. Owning property does NOT have to be a lifetime commitment. Buy your property, maximize value (that's why I like rent increase/bumps) and then SELL IT. You don't want to ever, ever, ever put yourself in a position where you've got two years left on a lease and begin to go into a panic as to whether or not your tenant wants to stay in your building.
Steven A. Arnold
Founder: Carnegie Wealth Managment
"Your Next Real Estate Solution"
Every day we talk with investors seeking simple answers to the complex real estate issues they're facing. Whether your issue is finding the appropriate 1031 Replacement Property, fine tuning your current portfolio, or struggling with income tax matters from a pending foreclosure, we can help.
My goal is to assist in finding "Your Next Real Estate Solution" to meet the investment goals and objectives that you have defined. The extensive network of real estate acquisition professionals that I've developed over 30 years in the business can locate property to meet your criteria for either 1031 Real Estate Exchanges, or to simply diversify and strengthen your existing investment portfolio.
"Your Next Real Estate Solution" have been found in all classes of real estate; single & multi-tenant retail, office, multi-family, & industrial. We've specialized in Triple Net Lease (NNN) Single-Tenant Properties.
I've spent three decades helping my clients find real estate investments that match their investment criteria, threshold of risk and investor temperament. My clients want to see Off-Market properties, that offer them the CAP Rates they require, the length of lease that makes sense and the price that is fair.
Often times, our "Real Estate Solutions" come directly from the developer, a private portfolio owner or other Off-Market sources.
We've worked with Federal Express, Dollar General, Tractor Supply, Pizza Hut, Hardees, Rally's, AutoZone, Walgreen's, CVS and other corporate giants.
If you're fed up with seeing the same old tired properties on the internet, frustrated over not getting prompt (or any) responses from your broker and have finally come to the conclusion that you might just need to change your search methods, please don't hesitate to contact me. If we don't have the property you're looking for now, just give us your investment parameters and we'll go out and find it!
We appreciate your interest and look forward to helping you find
"Your Next Real Estate Solution".
Steven A. Arnold
President
(239)-898-8918 direct line
carnegiewealth@earthlink.net
Miami and Fort Myers
