December 5, 2019
As Left Coast city governments continue to careen down the path of progressive destruction; rent control, defenestration of landlord property rights, toleration of vagrancy and encouragement of drug use, it’s not too late for rental property owners to pick up sticks and turn to Delaware Statutory Trusts, where suitable.
If no-tax Florida and other red states are good enough for the likes of Paul Tudor Jones, Barry Sternlicht and David Tepper, they should be good enough for you. This is particularly true if you can avoid capital gains tax liability with DSTs in the process.
Even President Trump recently announced he’s ditching his native high tax New York for no-tax sunny Florida. Like’em or not, these folks got to the top of the socio-economic pyramid by being trend anticipators not followers.
Did I forget to mention New Yorker Carl Icahn (net worth $17.5 billion USD) is moving himself and his company to Miami next year? “One day, I was at my home in Florida and thought, why the hell am I staying in New York?” Mr. Icahn, 83 years old, said in a phone interview.
Having been born and spent nearly his entire life in NYC, Mr. Icahn candidly states, “In the last few years I believe it (NYC) is certainly no longer the city of my youth.”
This is the challenge all rental property owners face; accepting the fact that liberals and a generation of their failed social engineering policies have created urban dystopias that are crushing business and opportunity.
New York, New Jersey, Connecticut and California are hemorrhaging jobs, money and high net worth residents at an alarming rate. This has been sufficient to put big holes in already strained state budgets.
Red states are bracing themselves for this in-migration of northerners. In anticipation of transplanted progressives attempting to turn the table on their adopted states both Texas and Florida have recently passed measures making it even tougher to impose an income tax in the future.
As already mentioned, Texas is one of the nation’s fastest growing states. This, of course, is in no small part due to its absence of income tax and an ‘open for business’ climate. It should please you to know that Lone Star voters just made it much tougher to alter this by passing a ballot measure that the state constitution to require any income tax legislation to win two-thirds support in both legislative chambers and majority approval in a popular referendum. Good luck with that one Governors Kate Brown and Gavin Newsom.
If you needed any more convincing that now is a good time to sell witness the front page of the Oregonian dated Wednesday, December 4, 2019. Lead article; Lloyd District Apartment Project Goes Bust. The much anticipated and ballyhooed development of 1,100 apartment units across from Lloyd Center died a quiet but expensive death. Three years into it, no ground has been broken and $30 million is gone. Last time I checked, big developers and big projects going tits-up are symptomatic of a market top, not bottom.
If someone from somewhere else wants to pay you stupid money for your apartment property, it just might be time to move on. And if suitable, DSTs may be a viable option to help you.
*This material and views are prepared solely by the author and does not necessarily represent the views of the its affiliates. Statements concerning financial market trends are based on current market trend, which will fluctuate. Projections are inherently limited and should not be relied upon as an indicator of future results. Historical figures and performance are not indicative of future results. This is for informational purposes only and does not constitute an offer to buy or sell any investment.
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. There are risks associated with investing in Delaware Statutory Trust (DST) and real estate investment properties including, but not limited to, loss of entire principal, declining market value, tenant vacancies and illiquidity. Diversification does not guarantee profits or guarantee protection against losses. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated.
Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This information is not meant to be interpreted as tax or legal advice.