What is Fee-Simple Property?

Fee-Simple Property is a broad category that includes all investment property owned outright by the investor. Fee-Simple Property includes all property types, from residential rentals, multi-family apartments, commercial office, self-storage, raw land, etc. Most of the properties owned by potential Exchangers today fall under this category. Fee-Simple Property provides an investor all the risks and rewards of owning investment real estate. Typically, the owner can make all operating decisions regarding the property, is personally named on any debt associated with the property, and bears all liability resulting from managing the property.

How Does It Work?

Fee-Simple Property is not limited to property owned by a single investor. Often Fee-Simple Property is owned in a co-ownership arrangement such as a multiple member LLC, partnership or Tenant-in-Common arrangement. These co-ownership arrangements must be considered and potentially restructured when Exchanging into or out of a property, if the owners want to go different directions. We work extensively with co-owned properties to ensure the entity and transaction is structured in a tax-efficient manner and can best address the objectives of the owners.

Benefits of Fee-Simple Property

Owners acquire Fee-Simple Property for many reasons. Common Fee-Simple Property scenarios include:

Selling stabilized properties to Exchange into properties with value-add potential
Consolidating multiple properties into a single, larger property
Exchanging into multiple smaller properties for diversification or estate planning purposes
Exchanging into single-family rental properties to be eventual primary residences or vacation homes

Objectives are different for each investment property owner. Utilizing a Fee-Simple Property in a 1031 Exchange may be a good way to address your objectives, however it should be noted that acquiring Fee-Simple Property can at times be difficult due to the rigid timeline of a 1031 Exchange.

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Understanding 1031 Exchanges

The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the Sponsor’s Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million dollars exclusive of primary residence) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney.

There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potentially adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Because investor situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.

Securities offered through Aurora Securities, Inc. (ASI), member FINRA/SIPC. Advisory services through Secure Asset Management, LLC (SAM), a Registered Investment Advisor. ASI and SAM are affiliated companies. Real Estate Transition Solutions (RETS) is independent of ASI and SAM. To access Aurora Securities’ Form Customer Relationship Summary (CRS), please click HERE. For Secure Asset Management’s Form CRS, click HERE. Real Estate Transition Solutions, ASI, and SAM do not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstances.

Client examples are hypothetical and for illustration purposes only. Individual results may vary.

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