Newsletter: May 2025
As May draws to a close and Memorial Day weekend ushers in the unofficial start of summer, the warmer days and winding down of the school year bring a sense of renewal. Whether you’re planning a getaway, attending a graduation, or simply savoring a quieter pace, I hope you find time to recharge this holiday weekend.
In real estate, summer sparks what we call “deal season”—a time when the market heats up, new opportunities emerge, and momentum builds for savvy investors. This month, we’re thrilled to share key updates, including exciting developments tied to the recent tax bill and fresh prospects for your portfolio. Let’s dive in!
On this month’s issue I’ll cover:
- The House passes the “Big, Beautiful Tax Bill”
- Distribution increases across our portfolio
- And a quick lesson on the power of 1031 exchanges
Big, Beautiful Tax Bill Passes the House – What it Means for You
Major tax reform is officially underway—and it’s shaping up to be a meaningful win for real estate investors, especially in the Manufactured Housing Community (MHC) space.
Earlier today, the House passed “The One Big Beautiful Bill,” a sweeping tax package aimed at extending and enhancing several key provisions from the 2017 Tax Cuts and Jobs Act. The headline for our industry: 100% bonus depreciation is back.
Under the current bill, real estate acquired on or after January 19, 2025, will once again qualify for full first-year expensing of qualifying assets. For Comfort Capital investors, this means our two most recent acquisitions—Casa Piena and Center Point—are expected to benefit from these accelerated write-offs, which will be reflected on your 2025 tax K-1s.
For MHC investors, this change is especially impactful given our superior tax advantage compared to other real estate asset classes. Infrastructure-heavy components—like roads, pads, water lines, and electrical systems—can now be fully depreciated in Year One, significantly reducing taxable income and boosting early returns.
To put it in perspective: with 100% bonus depreciation scheduled to return, a $250,000 investment could generate $250,000+ in paper losses in year one—losses that can be used to offset active or passive income, depending on your tax situation. These are real, tangible savings that directly improve after-tax cash flow.
We’ve always built our strategy around tax-efficient, cash-flow-focused investing. As the bill now moves to the Senate, we’ll continue to keep you updated on its progress and what it could mean for your portfolio.
Distribution Increases Across the Portfolio
We’re excited to share some great news—10 of our communities will be receiving distribution increases starting June 10th, with enhancements ranging from 0.25% to 1%+, depending on individual performance and reserve levels.
This is a major milestone and one we’re proud to deliver—especially in today’s real estate environment, where many operators are issuing capital calls or cutting distributions. Instead, we’re doing the opposite.
This moment underscores something we say often:
Manufactured Housing Communities are one of the most recession-resilient real estate asset classes.
Our ability to increase distributions—not just maintain them—is a direct result of strong, disciplined operations across the board:
- High occupancy
- Steady collections
- Targeted rent growth
- Conservative reserve management
In other words, the fundamentals are working—and the result is more real cash flow for our investors.
If you’re invested in one of these deals, keep an eye out for an email next week with more details. And if you’d like to review your current holdings, discuss how this impacts your portfolio, or simply connect, don’t hesitate to reach out. We love seeing strong operations turn into real returns for those who’ve trusted us with their capital.
The Power of 1031 Exchanges
One of the most powerful—and often overlooked—tools for building long-term wealth in real estate is the 1031 exchange. It allows investors to defer capital gains taxes by reinvesting proceeds from a sale into new real estate, effectively preserving more capital to reinvest and grow.
Let’s look at a simple example:
You invest $100,000, earn a 15% average annual return (non-compounded), and sell every 5 years over a 20-year period. If you pay a 35% tax on your gains at each sale, your reinvestment base shrinks—unless you use a 1031 exchange.
Here’s the difference by Year 20:
- Paying taxes every 5 years: $489,584
- Using 1031 exchanges (deferring taxes): $938,890
That’s a 92% increase in total wealth, simply by deferring taxes and keeping more of your capital working for you.
Now let’s look at the passive income in Year 20, assuming a 5% annual yield:
- Without 1031: $2,040/month
- With 1031: $3,912/month
That’s an extra $1,872/month or $22,464/year in passive income—every year—just by using a more tax-efficient strategy.
And here’s the best part: If you continue to 1031 exchange throughout your lifetime and never sell, your heirs can inherit the property with a stepped-up basis, eliminating all deferred capital gains. For those in community property states like California, your surviving spouse may receive a full step-up in basis, potentially allowing the property to be sold tax-free—even if it’s not passed to children.
At Comfort Capital, we don’t just accept 1031 exchange investors—we plan for them. When we sell a deal, we offer our investors the opportunity to roll their equity forward alongside us—building long-term, tax-efficient, multi-generational wealth together.
We’ve got exciting things ahead at Comfort Capital. Thank you for being a part of this journey. If you’d like to chat more about this newsletter or your investments, feel free to book a call with me below.
Enjoy the long weekend and talk soon,
Ben Schuster
