Sera Capital Is A Fee-Only Fiduciary That Focuses On Tax-Efficient Exit Planning
For Real Estate Investors & Entrepreneurs
Examine our website, and three things stand out. The first is that we have an extensive educational blog through storytelling. The second is that we embrace a high rate of return per unit of risk investing. The third is that we have entire sections dedicated to real estate. That’s highly unusual. The question is, why? Let us tell you a story.
A few years ago, a client decided to sell one of their properties. It was part of a general estate plan designed to provide heirs with liquidity and to eliminate hard-to-sell or complicated holdings. But there was a problem. The property had been held for over 30 years and, when sold, would have triggered an $800,000 tax. The $2.5 million sale proceeds would only leave $1.7 million.
Selling property is not uncommon, but a tax of this magnitude was. Traditionally we would have advised our client to proceed with the sale and invest the remainder in a securitized portfolio of stocks, bonds, and cash instruments. This was not uncommon since we dealt with several clients, primarily real estate investors, and utilized our services as an adjunct. But as fate would have it, we were having a casual conversation with another client that indicated we might want to explore an alternative solution.
The client indicated that a DST 1031 exchange might be appropriate and that there was a situation where an investor could convert 1031 real estate into a securitized property without paying taxes currently and potentially avoiding taxes altogether. We had never heard of it and did some research. This securitized property is called a DST and stands for Delaware Statutory Trust.
The story has a happy ending. Our client was able to sell the property and avoid taxes by investing in a portfolio of institutional quality DSTs that provides a monthly income almost twice as much as had they gone the traditional “sell the real estate and give it to the advisor/bank to invest” route. Once we witnessed this success, it was only a matter of time before we wanted to replicate this solution.
Since then, we have developed a process that is true to our fiduciary roots. Our fee-only consulting practice in 1031 exchange properties emphasizes transparency and no conflict of interest. A client must understand that we have no financial incentive if we recommend one DST for real estate over another. Because we’re fee-only fiduciaries, it’s our legal obligation to recommend the best investments – rather than steer clients toward deals with the highest commissions. If you’d like to know more about our unique billing structure, visit the contact us page to learn more about real estate investing and tax deferral strategies, and we’ll be happy to get back to you.
Delaware Statutory Trusts (DSTs) are securitized, unitized real estate investments available to accredited investors only via private placement that own a property or properties that can be used in a 1031 exchange. Translation – it’s a way to defer taxes on the sale of highly appreciated commercial or investment real estate. Please understand that DSTs aren’t for everyone. They’re for investors looking to unwind their real estate holdings and responsibilities without paying a big tax bill. If you’re still looking to grow your real estate via leverage and looking for double-digit rate of return investments, please keep doing what you’re doing, and we’ll be here in 20 years, waiting patiently for your real estate DST investment.
A few sites out there talk about the 1031 exchange DSTs or what some call the Delaware exchange. Please familiarize yourself with them, and when it comes time to purchase, purchase from a Registered Investment Advisor and investment fiduciary, like Sera Capital – who will waive 100% of all commissions and never steer you towards investments that could compromise your retirement. To learn more about DST 1031 Exchanges, please visit our 1031 Exchange Resource Center to learn more or