If you’ve found yourself with a portfolio of properties following the passing of a loved one, we’d first like to offer our condolences for your loss. No doubt, the process of moving through the probate system and settling the estate has been a trying time—even if your loved one had a will and personal representative already lined up to manage the process. If your benefactor left no will at all and you’ve found yourself on the other side of those challenges, you may still be feeling like you haven’t had a chance to breathe between all the legalese.
Likely, your loved one didn’t consider (or realize) what a burden this kind of inheritance can be. Between continued maintenance and upkeep on the properties, meeting the needs and demands of renters should the units currently lack property management, and the potential expenses of capital gains tax should you decide to sell, you likely still have so much left weighing on your thoughts.
If you currently lack clear direction on what to do with this tangible form of accumulated wealth, that’s completely understandable. However, we’re happy to inform you that there’s an easy out from the sudden demands of a large portfolio UPREIT investing.
How an UPREIT Works for You
As soon as you take the reins on a portfolio—even a gifted one—you become an investor. For many heirs, this is not something they may have ever intended to do at this stage. They may not even live near where the portfolio is centrally located.
If you’re a newly-minted investor, and the above applies to you, understand that that’s completely normal. If you’re feeling overwhelmed by the sudden responsibilities that come with property, that’s okay, too! Thankfully, no investor ever has to manage the work alone—and with the right investing strategy, there’s no work to manage.
One of the many benefits of converting properties into operating units in an UPREIT structure is maintaining all the tangible benefits of real estate that your benefactor worked so hard to acquire. An UPREIT’s returns are still based on real assets, unlike intellectual goods in the fluctuating stock market.
However, unlike traditional investing, you no longer have to manage the properties in your portfolio day-in and day-out to ensure they remain profitable: the ‘Umbrella Partnership’ portion of the REIT takes care of this for you!
Additionally, you’ll enjoy higher returns through UPREIT investing than you would managing a portfolio on your own—even with skilled property management. This is because the collection of properties that are managed by the UPREIT has greater diversity and the aid of being housed under one entity devoted to your returns. This makes enjoying income as a new investor easy—no matter where you happen to be located.
Your loved one didn’t work hard to create a financial future for you through property only to see it all be eaten up by capital gains tax! Instead of trying to field the challenges, stress, and expense of selling property so soon after their passing, you can convert those properties tax-deferred when you choose an UPREIT structure!
When you need to dip into your operating units by converting them to shares (and then to cash), you’re no longer bound to the value of a single property. You can liquidate as many or as few units as you need, and continue enjoying returns from the collective pool of units you have in the meantime—no stress, no mess, no hassle. This way, you’ll keep more of the legacy you were gifted by your loved one—and preserve their hard work for future generations to enjoy when you decide to write your own will.
UPREIT investing gives you the freedom to truly enjoy the gift you’ve been given—without worrying about the financial repercussions of such a gift. If you choose to share this gift with others, operating units are far easier to transfer and parse than an entire portfolio of properties.
Moving Forward With the Right Guidance
Not every UPREIT structure is the right choice for you as a new investor. You need a REIT provider that you can trust, with the experience and transparency necessary to ensure your investment conversion is successful and continues to grow. While it may seem daunting, when you have the correct guide to help your inheritance transition, you’ll find it will keep serving your financial future the way your benefactor had originally intended.
Allow The Peak Group to walk beside you during this time! We’re here to help investors who may have found themselves in a position of investing unexpectedly. With the transformation of a stressor into a successful way to secure your long-term financial goals, you’ll quickly discover the joys of investing in real estate. As fellow investors alongside you, you can be sure we’re always looking out for the best interest of those we serve.
Reach out to us to learn more about how UPREIT investing works for you during this time of change and growth.