As an accredited investor, by definition, you may have more assets and income than an average investor, because of this you have may access to more investment choices. The investments on our platform for accredited investors only are direct, illiquid investments in real assets through limited partnerships and other direct ownership structures in the following three categories:

  • Energy
  • Real Estate
  • Private Equity

Some of these investments are eligible for a section 1031 tax-free exchange* because they invest directly in qualified replacement property. Here are some of the types of investments available through TADA Wealth Advisors for accredited investors.

Energy Investments

In these investment programs our clients buy shares of limited partnerships that invest in the oil and gas industry. Some funds focus on drilling new wells, some focus on the acquisition of existing wells or other oil and gas assets such as pipelines and processing facilities, and some focus solely on the acquisition of mineral rights for investors to receive royalties on the sale of gas and oil. While many of our clients invest in these type of investments to take advantage of the IDC “Intangible Drilling Costs” tax deduction of the IRS Code, others invest strictly for the diversification and tax friendly cash flow potential. Direct energy investments are long term, most of them are typically seven to ten years but in some cases they are perpetual investments that have no end date until all of the wells run dry which can be longer than 25 years. We feel that, when suitable, some of those longer term investments could work well for estate planning and charitable gifting strategies.

Oil and Gas Developmental Drilling

Here you have direct ownership of units in a limited partnership that actually drills new oil wells, you represent the “working interest” in the wells meaning that you receive the lion’s share of the income from the sale of the gas and oil that comes out of the ground. If you invest as a general partner you can take advantage of a powerful tax deductions available today, the IDC “Intangible Drilling Costs” deduction as an ordinary business expense and may typically write off between 80% to 95% of your investment against your ordinary income in the first year with additional deductions in later years. (Link to IRS info on Section 236(b) IDC Deduction) For clients making over $500,000 per year this may be a powerful planning tool that offers tax-savings, diversification and tax-friendly income potential.

Oil and Gas Acquisition

In these investments you have direct ownership of units in a limited partnership that acquires existing wells that are already producing gas and oil, pipeline assets, processing facilities and other oil and gas related income producing properties. There is no drilling risk and no up-front tax deduction in these programs but potential income that is distributed may be tax advantaged through the depletion allowance. (Link to IRS Depletion Allowance)

Oil and Gas Royalties

These investments allow you to invest directly into the mineral right interests associated with land ownership. Land owners that own their mineral rights can sign a lease with an energy company e.g. Shell, Exxon, Chesapeake, Devon. These energy companies have to put up all of the cost of drilling and then pay the land owner a royalty for every barrel of oil, and every MCF of gas that they take out of that property. These investment funds acquire mineral rights from individual land owners who need liquidity for any number of reasons such as death and divorce. As the mineral right owner there is no drilling risk or expense to you. In these investments you simply receive a royalty check for all of the gas and oil that comes out of the ground, like owning a toll booth. Income will fluctuate with the price of oil and gas as well as with the amount of wells that come online and deplete on the acreage that your mineral rights hold title to.

IRS Code Section 1031 Exchange Eligible Energy Transactions

What many people do not know is that some oil and gas royalty investments are 1031 exchange eligible. Mineral right interests qualify as real property, and are eligible for exchange under IRS Code section 1031. What this means is that as an owner of real estate, you can sell a property and defer your capital gains by making an investment into an oil and gas royalty program via a tax-free 1031 exchange and continue to receive income from the oil and gas royalties. The income would also qualify for the depletion allowance.

Real Estate

Direct investment in commercial real estate has long been a proven way to diversify a portfolio. We have a number of investments in commercial real estate for accredited investors only. Here you would invest in either a single property or a fund that owns a group of properties. In the past, we have offered direct investments in the following categories:

  • Multi Family Assets (Apartment Communities typically of 150 units or more in major U.S. Markets)
  • Hospitality Assets (Full Service and Select Service Hotels from large brand names)
  • Office Assets (Class A and B Office Buildings)
  • Raw Land (Land to be entitled for development and sold at a later date)
  • Essential Assets (Distribution centers, regional hubs or corporate headquarters of middle market or fortune 100 companies)
  • Self-Storage Assets

IRS Code Section 1031 Exchange Eligible Commercial Real Estate Transactions

Some of the real estate programs available to TADA Wealth Advisors qualify as replacement property for a section 1031 tax-free exchange. When suitable, this is typically done through a structure called a Delaware Statutory Trust.

Private Equity

Private equity is just a fancy word for investing in a company that is not publicly listed for trading on a stock exchange. That could be a large company or it could be a small company. It is not Shark Tank or synonymous with venture capital. Private equity are typically deals where a team of seasoned business people are investing in established businesses to help take them to the next level are a number of large well run private companies in America such as Kohler, SC Johnson, Cargill, Koch Industries, for example, and there are over 325,000 middle-market companies that you have likely never heard of that employ from 200 or more people with revenues of well over $100,000,000. These companies have their own unique stories and needs and to raise capital they sometimes sell their shares or take on debt.

There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Private placements may include risks including, but not limited to potential loss of capital, illiquidity, and lack of public information about the company. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee profits or guarantee protection against losses. The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Because investors 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. The company examples listed herein may have proprietary interests in their names. Nothing herein shall be considered to be an endorsement, authorization or approval of TADA, CIS, CAM, CIA or the investment vehicles they may offer, of the aforementioned companies. Further, none of the aforementioned companies are affiliated with TADA, CIS, CAM, CIA in any manner.

*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, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results.  Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to sell any securities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) 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.