BRC Advisors – BH, Inc. provides net lease advisory services for IRC 1031 exchange clients and other risk-averse Investors. We serve multi-family investors and taxpayers who may wish to defer their substantial capital gain liability by utilizing current IRC 1031 exchange provisions. We specialize in credit tenant net leased assets to provide solutions for 1031 Exchanges; partnership basis solutions and foreclosure strategies in an increasingly volatile investment market. These assets afford an investor a stable, secure, predictable source of a return on their equity to diversify their portfolios from higher yield, more risky investment vehicles. A credit tenant asset with fixed-rate, long term debt and an investment grade tenant, in place, is more like buying a bond equivalent than a more speculative real estate investment. Many of our clients report that they have never slept better in their lives.
We specialize in credit and established franchisee tenant NNN properties which provide a predictable, stable and secure income stream in which the tenant has the sole responsibility for operating and management expenses that often erode the net income streams of income-producing properties.
This net lease niche of the real estate investment industry presents a risk-averse alternative for investors, many of whom are transitioning from management-intensive investments, like apartment buildings to a relative ‘coupon clipping’ option with predictable income streams and no management operations like their other real estate assets.
IRC 1031 provisions allow a taxpayer/investor to defer their gain and preserve their wealth. In choosing a net leased asset as a sound and conservative investment, an investor has a predictable income stream from tenants that are effectively financed on their creditworthiness; as well as, the real estate intrinsic of more speculative investments. This is an important consideration in our changing real estate landscape.
Debt structure should reflect the unique investment goals of each client which is then matched with current or prevailing debt structures available at one point in time. At BRC Advisors – BH, Inc., we clearly monitor market conditions and debt quotes, in order to provide accurate and updated assumptions for the debt component of any transaction contemplated by a client. Some clients are looking for short term (5-10 year) yield goals; others are tax-motivated investors looking to match up their IRC 1031 debt component. While others want to cash out of the current market and fix their debt cost for some horizon to weather potential market storms that may be gathering. We can access terrific debt sources who can respond in a timely manner which allows us to secure the most effective rates and debt structures to meet client requirements and close deals.
In addition to rental income streams and property appreciation, the tax benefit of depreciation deductions can make an impact for most real estate owners. We encounter many situations where substantial value has been created; and rather than selling or disposing of an asset, an investor wishes to refinance and continue to own the property over a longer holding period. A problem can be that the depreciation schedule has substantially run out whether 27 years schedule for residential or 39 years schedule for commercial assets. We find that these credit tenant net lease assets can be acquired in a highly-leveraged manner due to the tenant’s creditworthiness, often with debt pre-arranged on a non-recourse basis, which can be acquired as additional basis for an owned asset to create a better tax profile. Again, as always, your accounting professional can provide guidance if this strategy has application in your particular situation.