Estate Planning Strategies for Property Investors | The Peak Group

As an investor, you probably had multiple reasons for developing a portfolio that relied on property as your vehicle for long-term wealth. The numerous benefits of owning real estate have also contributed to the savings you’ve built for a successful retirement. However, there is one drawback of a wealth-by-property approach to investing: the management. This becomes especially apparent if you’ve been researching available estate planning strategies as a real estate investor.

Now that you’ve finally reached your golden years, and you’re ready to sit back and enjoy what you’ve worked so hard to build, it can be challenging to actually go forth and live that dream when you’re tied to your properties. This need for constant nurturing also presents a considerable roadblock to your heirs—or any desires you may have for your property-based wealth to support your favorite charity.

Take control of your retirement

It’s no wonder that plenty of investors turn to researching estate planning strategies online only to feel frustrated and concerned about the future of your investments when most of the proposed solutions aren’t promising for properties.

  • Does this mean your hard work was for nothing?
  • Was investing in property the opposite of the freedom that you sought?
  • What will happen to your heirs—and what you’ve built—when it’s finally time to leave an inheritance?

Don’t give up hope just yet: thankfully, there’s a solution!

Out of all the estate planning strategies available to you as a real estate investor, choosing to work with the right UPREIT can free you from the worry of the legacy you’ll leave behind. As an added plus, it can free you from some of those same woes if you’re currently using your properties to add continuous fuel to your retirement.

However, why should investors choose the benefits of an UPREIT when planning how they want to leave an inheritance? It all comes back to the major pain points every investor faces when they’ve been handling the reins on their own properties for years.

When You No Longer Want to Manage—or Can’t

Managing a large portfolio has certainly taken its toll. To successfully keep a diverse, multi-property portfolio afloat, you’ve probably had to make some considerable sacrifices along the way. You probably told yourself that the lost family time, lost memories, and lost freedom would make up for themselves with dividends when you reached your retirement years. Those dreams have probably been eaten into one by one as you’ve had to continue the upkeep across your properties into retirement.

The workload of a portfolio is even more apparent when you can’t be there to manage your rental properties on your own. Being a DIY investor has certainly been no picnic during the COVID-19 pandemic. If you’re one of many property owners who are at risk, managing your investment properties during a crisis is likely not what you had in mind for your retirement goals.

Managing properties can be such a strain that you probably considered offloading them with a hard sale—you certainly don’t blame your heirs for not wanting to manage the demands of a large portfolio. Additionally, you know that it would be complicated and expensive for your charity of choice to try and navigate the sale of your assets after receiving the gift your properties represent. However, a hard sale has its own shortcomings when it comes to estate planning strategies.

The Hidden Costs of a Hard Sale

If you’ve reached the point where you’ve considered this option, you already know why it would negatively impact your portfolio. When it comes time to make a sale, you can expect a punishing capital gains tax to eat into your hard work to the tune of at least a 15% or 20% loss.

We like to take the numbness out of the numbers by making them more relevant. If you had five properties in your portfolio of equal value that each represented 20% of your earnings, it would be like saying goodbye to an entire property! At The Peak Group, that doesn’t sit well with us: you worked hard for your financial freedom—you should be able to enjoy all of it.

Beyond the limitations of a sale with respect to capital gains taxation and considerable losses, there’s also the question of what to do once the funds are gone. Your investment properties may be a lot of work, but they’re also a source of additional, reliable income. Once you’ve considered these issues presented by a hard sale, you’ll quickly see why working with an UPREIT will become the best option out of your estate planning strategies.

Couple meeting advisor at home

Why UPREITs Work for You

An UPREIT (also known as an Umbrella Partnership Real Estate Investment Trust) is a new kind of partnership to help real estate investors looking for estate planning strategies to convert their portfolio into externally-managed, tax-deferred operating units. You’ll only see the capital gains tax when you convert your operating units into shares—and from there, to cash.

This kind of fluid, simple transition makes it easier than ever for investors to parse a property portfolio into a legacy that’s easy to leave to your heirs or beloved charity. It also allows you to tap into the benefits of owning real estate—without the work—while offering the additional diversity that working with an UPREIT can provide.

When it comes to your estate planning strategies, UPREITs give you the freedom to truly enjoy your retirement while leaving a legacy your heirs will actually want. To tap into this potential, you need a guide who can show you how to maximize the benefits of an UPREIT partnership. Thankfully, you have The Peak Group.

Our expertise as real estate investors gives us unique insight into how an UPREIT can work for you! Get in touch with us today to start your true journey to financial freedom—and enjoy the retirement you’ve worked so hard for.