Direct Investment Overview

You may wish to consider adding direct investments in tangible or hard assets to your client’s portfolio. These types of investments may provide tax benefits, income, and/or capital appreciation for the client without correlation to the equity markets.

Non-Traded REITs

Non-Traded REITs are total return investments that typically provide high dividends plus the potential for moderate, long-term capital appreciation. REITs are attractive additions to investment portfolios because there is a relatively low correlation to publicly traded real estate stock returns as well as providing diversification. In addition, reduced volatility and simple tax treatment are appealing traits of non-traded REITs.

Private Real Estate

Private real estate programs, such as Limited Partnerships, TICs, and Private REITs, offer access to investment grade real estate, professional expertise, and the benefits of ownership without the daily issues that often accompany them. These programs are for accredited investors only and are not registered with the SEC which typically means higher minimums and less associated administrative costs.

1031 Exchange Programs

Although a 1031 exchange falls under private real estate, it is a different type of investment. These are used for clients that own investment real estate they would like to sell but want to stay invested and defer the taxes owed from the sale. The IRS code 1031 allows for the exchange of investment real estate while deferring the taxes. There are many rules associated with 1031 exchanges. ProEquities can help you understand and navigate these rules before you proceed with your client.

Leasing Programs

When inflation and rising interest rates erode bond and stock values, hard-assets, such as equipment and real estate, potentially increase in value. That’s just one reason why leasing programs can be so popular with investors: it’s a way to invest in the growth of the global economy for a contract-driven yield (vs. a market-driven yield) that is inversely correlated to paper assets. These programs may also provide tax deductions against the income generated.

Oil and Gas Programs

There are three types of Oil & Gas programs available through ProEquities: developmental, exploratory, and royalty investing. Developmental drilling programs can provide significant tax benefits to investors as well as possible income. The exploratory programs are very profitable when oil and/or gas is discovered. Royalty investing programs are designed for long term income and less risk than traditional energy programs. These programs provide further options in helping you map out your clients individual investment strategies.

Any discussions regarding the above programs must be preceded or accompanied by a prospectus or offering memorandum. An investment in the any of the above programs can be speculative, lack liquidity, involve substantial fees and can result in a loss of your entire investment. There is no current market for these programs. There are suitability requirements for investors that must be met, including those that require an investor to be an Accredited Investor. Certain states may also have additional requirements that apply. Discussions regarding a specific tax strategy are for educational purposes only and should not be considered tax advice. You should consult with a tax professional for your specific situation.