Grateful to Those Who Read This Newsletter

 

Happy November and Gobble Gobble!

 

• We had this branding meeting this week, and we're supposed to ask, "What do people say about you when you're not in the room?" LOL!. For me, I think they say, "Marissa, always leave 'em wanting less," in a good way, I hope.

 

• Humble brag: I was honored to hear that I was the "Top Producing Agent" at Red Oak Realty for October. You'd think this honor would come with a crown, or at least a sash, but no such luck. Even sashless, I was thrilled to find new homes for M&M, E&J, B&J, and to close escrow on M&A's home last month. 
• Young love: One of my favorite transactions this month was a sweet young couple who closed on a house in Oakland for $75,000 under asking and got engaged the next day! Congratulations to E&C for being able to afford a first home AND a wedding ring. ;-)
• New listing: Know anyone looking for a 6-bedroom, 3-bath, 3,100-square-foot home on the Piedmont side of Montclair? Stay tuned for the reveal in early January. In the meantime, I'll be posting some riveting behind-the-scenes videos. 

• At this year's Montclair Holiday stroll, you can visit Ilan Penson and me at our craft booth and check out my hip hop group as we do a flash mob. Remember, I'm one of the youngest members of our group, so if nothing else, you'll smile. If you'd like to know what time we'll be dancing, email or text me and I'll let you know. The event is Thursday, December 11th, from 4-8 pm, and it's lots of fun!

Remember, if you need referrals for home maintenance-related vendors, I'm your gal. Only once was I stumped to find a vendor to take apart and clean a vintage oven, but I do like a challenge.

 

Thank you for reading my newsletter and for being part of this wonderful, quirky, ever-curious community. You're the reason I get to do what I love €”and why I try to make these emails slightly entertaining.

 

 

 

Bay Area property owners who have held investment real estate for any length of time have likely seen extraordinary appreciation. Property can be a large portion of a person's wealth portfolio, but it often requires oversight and maintenance, and not everyone wants that responsibility. So, while the significant appreciation is great news, there's a catch: selling means a tax bill that could exceed 37% of gains when combining federal, state, and net investment income taxes. 

 

Fortunately, there's a better way.

 

A 1031 exchange allows someone to sell an investment property and reinvest the proceeds into another "like-kind" property while deferring all capital gains taxes. Sellers have 45 days to identify replacement properties and 180 days to close on the purchase. These deadlines are absolute, with no extensions, so working with a qualified individual is crucial for success. For Bay Area owners sitting on substantial gains, this isn't just smart, it's essential tax planning.

 

Many property owners may decide that it's time to pass along the headache of tenant calls, maintenance concerns, and property management stress to another party.

 

Here are four strategies to consider:

 

Delaware Statutory Trusts (DST) qualify as a like-kind exchange under 1031 rules and allow investors to own fractional interests in institutional-grade properties (medical buildings, distribution centers, large apartment complexes) without any management responsibilities. The trust owns the property and investors purchase ownership shares using a 1031 exchange on a tax-deferred basis. Each owner receives regular distributions while a professional asset manager handles the property management. It's 100% passive with minimums that typically start at $100,000. The timing rules governing a 1031 exchange still apply, and there are some constraints with the DST structure (for example, current leases cannot be renegotiated, improvements are limited, and you are typically only investing in one property, etc.). Yet, many will agree that the benefits of tax deferral and passive ownership outweigh the limitations.

 

One of the knocks against a DST is that it often involves a single property offering limited diversification. But some real estate sponsors are structured as an Umbrella Partnership REIT, or "UPREIT", which allows for property to be exchanged into the REIT using Section 721 of the tax code. An investor may have completed an initial transaction into a DST, but after two years (to satisfy investment intent), they could exchange their DST interest for operating units of the REIT. This allows for ongoing tax deferral and greater diversification as the UPREIT would own many real estate properties. For investors looking for passive ownership, tax deferral, and enhanced diversification, a DST into an UPREIT may be an attractive solution.

 

A relative newcomer to the list of tax-deferral strategies for real estate owners? A real estate fund that is structured as an LLC that is taxed as a partnership. If structured properly, it may allow for direct contributions of property or partnership interests (under Section 721) in exchange for units in a fund. This structure meets the primary goals of diversification, passive ownership, tax deferral, and recurring income. Plus, the pass-through nature of an LLC allows for any depreciation to be passed through to fund investors and provides potential estate tax savings with a minority partner discount. This makes it an attractive choice for real estate owners looking to optimize their investment strategy. 

 

When asked about common mistakes that investors make when engaging with one of the strategies above, Andrew Bishop with Bernstein Private Wealth Management's Wealth Strategies Group shared that "not meeting the timing requirements or understanding the liquidity needs," can impact the transaction. "Clients tend to focus on the tax deferral, not on the investment returns or the quality of the property itself." This is where having a qualified, experienced real estate agent also becomes important.  

 

Investors can keep exchanging into progressively easier-to-manage properties while deferring taxes indefinitely. When heirs inherit, they receive a stepped-up basis €”meaning all those deferred capital gains are forgiven. This strategy simplifies life while maximizing long-term wealth. For example, an investor could own and manage rental properties for a period, and when ready, complete a 1031 exchange into a DST €”and potentially a 721 UPREIT after two years €”for completely passive income.

 

"As real estate is often a large part of a family's wealth, it is critical that it is integrated into a well-thought-out estate plan," says Dylan Malot, Principal at Bernstein in San Francisco. It is often the case that the next generation has no desire to manage the property or properties, so succession planning matters.  

 

California's 13.3% state tax rate makes tax deferral especially valuable. On a $1.5 million gain, a 1031 exchange could save over $500,000 in taxes. That's money that continues working for the investor instead of going to Sacramento and Washington, DC.

 

East Bay property owners have built substantial wealth through real estate. Some may be unsure how to make that wealth work for them and toward their lifestyle goals. Whether they're looking to travel more, spend time with grandchildren, or simply sleep better at night, a properly structured 1031 exchange allows simplification without sacrificing financial security.

 

The rules are complex, the deadlines are strict, and the stakes are high. Property owners should consult with qualified professionals to create a customized strategy that matches their goals. The strategy aims to defer taxes as long as possible until they disappear entirely (whenever possible). 
 
This article was written in conjunction with Andrew Bishop, Director, and Dylan Malot, Principal, of  Bernstein Private Wealth Management. This newsletter is for informational purposes only and does not constitute tax or legal advice. Consult with qualified professionals before making any exchange decisions.

 

The Inner East Bay real estate market in October 2025 showed mixed trends compared to the same month in 2024. Overall, single-family home sales rose 3%, totaling 683 units, while the median sales price declined 4% to $1,025,000, suggesting slightly cooler pricing despite steady demand.

 

Oakland, the largest market, saw a 10% drop in sales but an 8% rise in median price to $975,000, indicating strong buyer interest, likely in part due to better mortgage rates. Albany and Berkeley also recorded higher prices and sales, with Albany leading in price growth - up 25% to $1.595M - and stronger buyer competition. San Leandro stood out with a 63% surge in sales, maintaining a stable price at $874,000.

 

Weaker activity was noted in San Lorenzo and San Pablo, both with over 20% fewer sales and declining sale-to-list ratios, suggesting softening demand. El Sobrante experienced the largest price drop - down 19% - despite increased transactions, likely due to more affordable homes entering the market.

 

In summary, the East Bay market remains active but uneven, with price trends varying widely by city and buyer demand shifting across price tiers.

 

 

7415 CIRCLE HILL DR

OAKLAND

Sold | Represented Buyer

 

1801 GOULDIN RD

OAKLAND

Sold | Represented Buyer

 

2578 RIDGE CREST CT.

CASTRO VALLEY

Sold | Represented Buyer

 

4926 DESMOND ST

OAKLAND

Sold | Represented Buyer

Throughout our communities, people are in need, with charitable contributions more important now than ever. Every year the Red Oak Opportunity Foundation (ROOF) contributes to East Bay organizations that provide services to the unhoused, programs for women and children, education for teens and at-risk youth, and so much more. Last year alone ROOF donated to 23 non-profit organizations.

 

For every dollar donated to ROOF on Giving Tuesday this year, Red Oak will match up to $5,000. Giving Tuesday falls on December 2nd this year. Please consider ROOF when looking for ways to support your very own communities this year - 100% of your tax-deductible contributions go to support your local East Bay neighbors. Learn more and donate at www.redoak-roof.org.

 

 

Red Oak has once again joined local businesses to make sure every child in the East Bay has a toy for Christmas. For 75+ years, over 708 million toys have been donated to children in need. Please consider donating a new, unwrapped toy to this worthy cause. Collection boxes are currently located at our Montclair, Berkeley, and El Cerrito offices until the end of day on December 10th:

 

 

Offices are open from 9:00am - 5:30pm, Monday-Friday. If you would prefer to give a monetary donation, or a virtual toy, please click HERE to go to their website directly. 

 

Join a curated selection of Red Oak artists for East Bay Open Studios taking place on December 6-7, at Red Oak's Berkeley office: 1575 Hopkins Street. Explore beautiful paintings, ceramics, photography and more from 10am - 4pm. If you are looking for that special holiday gift, this may be the place! A portion of the proceeds will go to support ROOF and local nonprofits. 

 

Red Oak has created an annual desk calendar with different East Bay themes each year for the last two decades. Our 2025 calendar features a "Best Of" collection of our favorite snapshots from over the years. We hope you will enjoy these varied moments in time.

 

Sunset from Kensington - East Bay homeowners have no shortage of spectacular sunsets. Whether driving home from work or play, or simply taking in the views, our skies have delighted the photographer within us all. This image, captured from a Kensington balcony in 2020 during the Pandemic, is one example of the beauty that surrounds us each and every day. A reminder that, even when life feels overwhelming, stopping to be present, to look for the beauty, is worth experiencing and sometimes capturing - a snapshot in time.

 

The 2026 calendar is almost here! If you would like a free copy just reply with your mailing address and it will be mailed to you this December.

 

Celebrate the spirit of mezcal and tequila with craft cocktails and delicious bites at the Blue Rabbit Bar in San Pablo! Nestled in a small plaza, it is a local neighborhood hangout that offers a variety of Mexican bites, an impressive selection of tequilas, and Mezcal-inspired cocktails. Cozy, intimate, and as blue as can be, this hidden gem makes you want to relax and stay awhile. Outdoor barstool seating is readily available for overflow or if you prefer a cool outdoor experience while you vibe under the blue neon lights. Looking for foodie recommendations? Order the perfectly loaded nachos, beefy empanadas, and the sweet mini churros served with caramel and chocolate sauce for a good time!