investment

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Social Investing in Real Estate

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All of my clients want to earn a reasonable rate of return on their passive real estate investments but more and more they also want to do something good if they can at the same time.  Enter Social Investing.  While real estate is not the norm in social investing there are several commercial real estate investments that provide safe, secure long term yield while at the same time doing something to help other people and/or the environment.  Here are a few of the investments my clients are considering when investing in commercial real estate in a socially Social Investmentand environmentally conscious way:

  • Green and LEED certified buildings
  • Historic Preservation and Rehabilitation
  • Community Investments such as non-profit tenanted buildings and conservation easements
  • Buildings with solar features, gray water systems and/or green roofs
  • EnergyStar certified buildings

Contact TMO for assistance in planning your next social investment in real estate. email or 1.866.539.1777

Here is some general info about Social Investing.

Social Investing Definitions:

•    Socially responsible investing, also known as socially-conscious or ethical investing, describes an investment strategy which seeks to maximize both financial return and social good. Source

•    Limiting one's investment alternatives to securities of firms whose products or actions are considered socially acceptable Source

•    Social investing is the deliberate effort to invest money in financial securities that reflect your personal social attitudes while avoiding financial securities that support things you disagree with. It can also reflect religious, political or environmental beliefs as well. Social investing stems from the philosophy that financial support of something is the same as endorsing it. Source

Contact TMO for assistance in planning your next social investment in real estate. email or 1.866.539.1777

Most Relevant Sites on Social Investing and Social Investments:

1. What Is Social Investing? Discusses Identification, Significance, Geography, Effects and Considerations of Social Investing. http://www.ehow.com/about_4614985_what-social-investing.html

2. Social Investing Business Ethics. The Magazine of corporate responsibility http://business-ethics.com/

3. Socially responsible investing (wikipedia) Wikipedia information about Social Investing http://en.wikipedia.org/wiki/Socially_responsible_investing

4. Social Investment Forum The Social Investment Forum (SIF) is the US membership association for professionals, firms, institutions and organizations engaged in socially responsible and sustainable investing. SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. http://www.socialinvest.org/

Contact TMO for assistance in planning your next social investment in real estate. email or 1.866.539.1777

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5 Tips for Your Next Ground Lease Investment

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Wells FargoGround lease investment properties are some of the most unique types of NNN opportunities. While a regular "fee simple" triple net investment consists of both a building and the land on which it sits, a ground lease investment (which is also, technically fee simple) consists of just the ground. Instead of getting rent for the building, you get rent for the use of your ground.

Here are some tips for how to buy and profit from a ground lease investment:

  1. Look for good tenants. Frequently, a ground lease investment will have a very strong tenant. McDonalds locations are frequently available as ground leases and many bank branches can also be purchased as ground leases.
  2. Plan on appreciation. One of the drawbacks to buying a ground lease investment property is that you usually won't be able to depreciate it. The IRS doesn't let you depreciate land since it doesn't lose value over time through deterioration like a building would. The upshot of this is that you're not buying the part of real estate that loses value -- you're getting the good part. While the building on your land might be obsolete in 20 years, the land itself shouldn't be.
  3. Pay a little bit more. A ground lease investment will usually a carry a lower cap rate than other triple net properties. First, you're usually buying a property with a good tenant, which in and of itself carries a lower cap rate. Second, income from land is usually valued at a higher multiple than income that comes from a mixture of land and building.
  4. Leverage capital that's been 1031 exchanged a few times. When you've done a few 1031 exchanges, you end up with so much old basis that it gets part to effectively depreciate a new investment. Since you generally can't depreciate a ground lease investment anyways, using your oldest capital to buy it helps to free up money with more basis attached to it for acquiring depreciable assets.
  5. If it looks too good to be true, it is. Sometimes, you'll see a ground lease asset that seems like a screaming deal -- instead of being a 6.5 cap in an 8 cap marketing, it'll be a 10 cap. If you find one of these, proceed with caution. Sometimes, a broker will list a leasehold interest as a ground lease. When you buy a leasehold interest, you aren't buying dirt, though. You're buying the building and its right to use the land -- which eventually expires. While a leasehold interest can be a good choice, it's very different from a true ground lease investment and is less expensive for a reason.

Ground Leases For Sale

Contact Thomas for more information about ground lease investments via email or toll free at 1-866-539-1777 or see ground leases for sale.