Typical Problems Faced by Senior (55 – 85 year old) Real Estate Holders:

• Significant net worth concentrated in income producing real estate
• Properties have little basis remaining
• Wishing for more after tax cash flow
• No longer interested in headaches of tenants
• Wanting to simplify life and reduce risk
• Not wishing to pass on property management headaches to spouse or heirs
• Concerned about the uncertainty of the economy and real estate market
• Concerned about availability of refinancing in the future

How do you solve the problem of eliminating property management, reducing uncertainty, and increasing cash flow and liquidity while minimizing taxes?

Traditional option # 1
is to sell the property and pay taxes on the gain. This is usually an expensive and unacceptable solution. Given this as an option, many owners keep the property and live with the uncertainty, headaches and risks. Millions of seniors who would like to "exit" real estate are stuck with it to avoid the income tax. There is an alternative.

Traditional option # 2
is to exchange the property into some other operating property or UPREIT, etc. This is frequently seen as not a much better solution than Solution #1 since it has continuing risks, uncertainties, limits on cash flow and liquidity that are not ideal solutions during lifetime or for estate planning.

The New Option – Option # 3
CPR Finance Program Non-Recourse Financing "Cashectomy" Solution
Get cash out of your property and into your pocket without triggering taxes. This is done through our special 90+% non-recourse financing of a 1031 exchange property. This allows you to re-invest your cash in whatever vehicles you choose (treasuries for safety, annuities to maximize lifetime income, stocks, NNN leases, etc). This will reduce your headaches, risks, uncertainty and illiquidity and increase your cash flow.

Example:

Joe is 78 and his spouse is 65. Over the years Joe has accumulated a considerable portfolio of income properties ($25 million). The properties have little basis and little remaining depreciation. He is tired of the headaches of management and the uncertainties of the market. Additionally, when he recently calculated his after tax cash flow, he realized that his return on equity is quite low.

He and his spouse would like more cash flow, more liquidity to do some estate planning, and would like to simplify their lives and eliminate the real estate headaches. Also, while in his younger years he was interested in increasing equity and net worth, now he is interested in more cash flow because the estate taxes will ultimately tax any increases in his net worth anyway.

Option A - Cashectomy

Our "proprietary financing" solution will allow him to sell his property for $25 million, purchase 1031 replacement property to defer the $7 million of capital gains tax. Well, you might say, "That's just a plain vanilla 1031 exchange."

But because of our 90+% non-recourse 25 year fixed financing, he can pocket 90+% of his cash and spend it, or invest it, or make gifts to grandchildren without regard or worry about managing the replacement property or the future of the economy or the real estate market.

So, in this example, the client would have pocketed $22,500,000 out of the sale price $25 million and is free to spend or invest however he chooses (and pay no taxes!)

Option B – Long Term Bond-like Yield

1. Exchange property into "long term, high yield, bond-like income" through long term single tenant triple net 25 year commercial grade leases.
2. Eliminate capital gain taxes on the sale of his existing properties
3. Eliminate management headaches, tenant problems and economic uncertainty.
4. Generally this results in increasing the after tax income since the annual cash flow on the replacement property is two to three points more per annum than the current property.