The case of a recent client describes a typical zero cash flow investment. The individual in question sold a traditional real estate investment for 15 million dollars. Following the sale, he contacted our firm to investigate the possibility of deferring the payment of capital gains taxes on the profit from the sale. At the time of the initial meeting with our professionals, he indicated that, in addition to deferring the tax on his gains, he would like to maximize his cash flow and possibly acquire a stable long term real estate investment. These three requirements made this client an excellent candidate for a zero cash flow investment opportunity.
From our extensive inventory of zero cash flow investment properties, we were able to secure a zero cash flow investment in four CVS Pharmacy buildings which resulted in the deferment of 100% of the capital gains taxes that the client would have owed on the recent sale of his real estate investment. In addition, we utilized seller financing to advance 89.9% of the total proceeds of the sale 45 days after closing, thus freeing up the client’s cash for investment in other projects. In this case, the owner planned to sell the investment in 12 to 18 months in order to realize the additional equity on his investment.
The aforementioned case clearly highlights the selling points of zero cash flow investment opportunities. Such investments allow the buyer to defer the capital gains taxes on a previous real estate sale while, at the same time, providing them with access to a large percentage of their invested capital for use in further investment opportunities. Because these deals can often be closed very quickly, they have the added advantage of allowing investors to meet the strict time constraints of 1031 Exchanges. In addition, as was true for the case above, they often provide the investor with the opportunity to acquire a stable medium to long-term real estate investment which can then be sold for additional gains. This is possible due to the fact that zero cash flow investment properties are easily marketable and can be quickly and easily sold back to the seller or to a buyer on the open market.
The experienced professionals at CGT Solutions have an extensive inventory of zero cash flow investment properties and have traded in excess of a billion dollars in zero cash flow investments. If you are interested in a zero cash flow investment in order to defer capital gains taxes and/or meet the timing constraints of a 1031 Exchange, contact us today.
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