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Additional Products
Diversified options designed to meet a wide-range of investment objectives.
At Direct Capital Securities, your investment options are never limited to just 1031 replacement
property. We can provide access to a number of investment vehicles designed specifically to meet the needs
of high-net-worth individuals.
Energy Investment Funds
Real Estate Investment Trusts (REITs)
Real Estate Development Funds
Real Estate Tax Liens
Energy Investment Funds
An Energy Investment Fund can provide accredited investors access to a diversified pool of cash producing
energy assets. Unlike many energy investments, an Energy Investment Fund can be structured to accept
monies that have been previously invested in traditional retirement plans. In addition, this type of fund
structure carries no debt and is not subject to unrelated business taxable income (UBTI).
As world demand increasingly outpaces supply, owning production in currently producing wells represents
a prudent option for adding energy to a diversified portfolio. Every barrel of oil and every MCF of natural
gas is needed––and global pricing reflects this fact. The era of “cheap oil” is showing its age. An Energy
Investment Fund can take advantage of market demand by purchasing production from multiple fields across
the United States. This strategy represents a risk-adjusted option for individuals seeking steady cash
flow potential and portfolio diversification into energy.
Real Estate Investment Trusts (REITS)
In a Real Estate Investment Trust (REIT), investors are allowed to pool funds for participation in real
estate ownership or financing. Investors contribute capital that is used to purchase interests in
high-quality real estate. The properties will provide immediate income from tenant rents and offer the
potential to appreciate in value so that they can ultimately be sold at a profit. In return for their
investment, participants receive dividends plus a potential increase in equity through the growth of the
company. As required by law, a REIT must distribute 90 percent of its annual income to shareholders. Or,
it may reinvest a portion of the capital to improve its portfolio.
REITs have gained popularity in recent years because many professional advisors recommend allocating a
portion of an investment portfolio to investment real estate. REITs provide limited liability and
centralized management thus represent an easy, hands-off approach to real estate investing. In addition,
many REIT companies are traded on the national stock exchanges thus there is an established secondary
market for liquidity. However, private REITs are less liquid.
It should be noted that REITs are not considered “like kind” replacement property for the purpose of a
Section 1031 Exchange. Investors are not allowed to exchange "into" or "out of" a REIT.
Real Estate Development Funds
Through a Real Estate Development Fund, investors contribute money that will be used to finance multiple
development projects over a specified period of time. Investor return is based on the overall success of
the Fund’s portfolio of assets. This diversifies risk over several projects––investors are not limited to
the success of individual real estate investment ventures. Real Estate Development Funds can be structured
to accept monies that have been previously invested in traditional retirement plans.
Real Estate Tax Liens
For more than 100 years, county governments have sold real estate tax liens to the public as a means of
generating cash flow lost from delinquent property taxes. Governments in 31 states and the District of
Columbia auctioned off between $5 billion and $7 billion of unpaid property tax bills in 2005 alone.*
Tax liens are government issued, real estate secured and provide dependable returns on investment. These
facts make tax lien investing one of the safer and more dependable options available in the market today.
There are only three possible outcomes that can occur from purchasing real estate tax liens. Two make money
for investors.
1 Redemption. Once a lien redeems (is "paid off"), the investor
receives; the principal, interest and/or penalties. The interest
rate paid on tax liens is set by local governments, and the
amount of interest and penalties assessed varies from state to
state (5% to 24% per year). In addition, redemption periods
vary state to state, ranging from a period of one to
three years.
2 Foreclosure. If the lien fails to redeem, investors can pursue
foreclosure on the property. A successful foreclosure will result
in acquiring the property for 1% to 2% of assessed value.
3 Non-Redemption/Non-Foreclosure. In some cases, liens are not
redeemed, as it is determined that the collateral property is not
worth acquiring. Investors will then not redeem the original
cost of the lien and incur a loss for the cost of the lien.
Institutional investors such as major banks, insurance companies and other financial entities invest
billions of dollars each year in tax liens because of their ability to generate solid returns with limited
risk to capital.
Investing in tax liens utilizes an investment strategy providing income for investors from two different
sources. First, interest and/or penalty income is generated through the redemption of tax liens purchased.
Second, investors also participate in profits generated from the sale of properties acquired through
foreclosure.
These factors make tax lien investing an attractive investment option for individuals seeking to balance
the need for dependable cash flow with preservation and protection of capital.
*National Tax Lien Association 2002 industry estimate
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RESOURCES
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Email us and we will
respond within 24 hours.
info@1031market.com
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Copyright ©
Direct Capital Securities, Inc.
LEGAL NOTICE AND PRIVACY POLICY
The public portion of this site contains only general information regarding classes of products and services that
are designed to meet the needs of §1031 exchangers and other qualified investors. In order to receive any
information on actual investment vehicles you must register for our site and meet our accreditation qualifications.
This is not an offer to sell or solicitation of an offer to buy any security listed herein. Such offer may
only be made by written prospectus in a jurisdiction wherein the offering is duly registered or exempt therefrom.
Past performance is no indication of future performance. Nothing herein shall be construed as tax, legal or
accounting advice, you should contact your own advisor for such advice.
Securities offered through Direct Capital Securities, Inc. Member FINRA/SIPC.
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