Investment Structures

We are always looking to place funds for upcoming acquisitions. The funds can come from several sources:

Buyers in 1031 Tax Deferred Exchanges.

1031 is the widely used tax code allowing an owner to reinvest in other like kind real estate with in 6 months of selling.   For owners to combine their individual equity interests, ownership is held as a Tenant in Common or TIC and each TIC receives a fee simple title deed for their undivided percentage interest in the entire property. Each owner has the same rights as an individual owner. Typically these investors / buyers were in fact Sellers and have 45 days. from the closing of the down-leg or relinquished property to identify a replacement property(ies) in which they are the now the Buyer.

They have 180 days to close on the replacement property.The replacement property is defined as “like- kind”, but need not be the exact type of investment property. Of course owners can accomplish their own exchange, but in many cases it makes sense to invest exchange proceeds in a TIC structure. Bluesky can act as sponsor and management company. This shifts the acquisition and management of a property onto Bluesky and its expert team.

We are finding that as prices in residential continue to increase, more investors are buying into commercial TIC structures as a way to invest in larger properties. Owners are also selling properties that they have owned by themselves and exchanged into properties co-owned in TICs allowing them to own bigger and own without all of the management responsibilities. Still other owners elect to go into TIC ownership if they cannot find their ideal match as a replacement property. They find that maybe the prospect of buying something strange to them is not what they bargained for. In this case TIC ownership is refreshing because the sponsor’s expertise and management take over. 1031 exchange transactions are time sensitive and sometimes sell out quick.

Passive Investors interested in placing equity in real estate.

These structures may or may not be TIC ownership, and these investors may not be in an exchange. BlueSky Management Corp. may be acquiring a property to reposition, or hold because we see good long term potential. Most of the properties we acquire are hard to come by and take time, patience and resources to maximize return. In this category, investors or partners are carefully matched. These properties are usually held in a newly formed, single asset LLC. We may work with one or several investors on a detailed business plan so the desired outcome or return exceeds expectations.

Passive investors interested in placing debt.

Debt may be placed on the property in the form of a collateralized first or second trust deed. It’s a win win. You get security and a nice return that may be difficult to find elsewhere, and priority security and payback over equity investors. The benefit to us is we don’t have to source financing through a bank.

Self Directed Retirement Investing is a way to accelerate your asset values:

Individuals or corporation can invest discretionary or “Self Directed” retirement funds in equity or debt. This is a great way to diversify out of the stocks and bonds already owned. The easiest way to do this is simply loan on a propertyusing a promissory note or collateralized 1st or 2nd trust deed. If you go the equity route, it would most likely be investing in one of our all cash transactions. We would manage the property and the property would be owned by one or several investors with similar retirement plan funds.

Real Estate IRAs and SEPs. More investors are moving money from traditional stocks and bonds and the big brokerage houses into “Self-Directed” SEPs, IRAs and 401ks. While not real widely known as to the mechanics or even who the firms are that do this- it can be done and is being done a pace that seems to be doubling each year. Fueling this growth are disenchanted investors and baby boomers that want to take investing into their own hands. They see the benefits or diversification and researching properties they find interesting. You don’t have to be a high net worth individual, but for large commercial properties, an investment of say $50,000 is a good starting point.

Custodians handle the paperwork and we handle the management. Some of the rules still apply in that you cannot take possession of the funds directly, but you can direct them through the custodian. Give us a call to learn more about this great investment vehicle.