Case Study: Obtaining Liquidity With Cash Out Solutions

This real estate investor needed immediate capital without triggering taxes. Breakwater Exchange delivered a creative cash out solution with long-term benefits.

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Using a Cash Out Strategy to Unlock Capital When it Was Needed Most

An experienced real estate investor found herself in a high-stakes dilemma following the 2022–2024 interest rate surge. Although her portfolio was substantial, most of her wealth was illiquid, tied up in multiple real estate holdings. She had over-leveraged a development deal based on outdated debt service assumptions. As rates climbed, her payments doubled, and she lacked the capital to stay afloat. Selling assets wasn’t appealing due to the massive capital gains tax it would trigger. She needed a fast, strategic, and tax-efficient way out developed by Breakwater Exchange.

A Tactical Liquidity Plan Using Zeros and Refinancing

Breakwater Exchange’s solution began with a deep analysis of her existing assets. We structured an exchange of two appreciated properties into high-leverage Zero offerings. This approach satisfied her 1031 debt replacement while enabling a tax-free refinance, immediately unlocking liquidity. She then used the proceeds to resolve her development project’s cash flow crisis, complete construction, and preserve the long-term value of her investment.

The Final Result: Preservation, Recovery, and a Strategic Exit

With Breakwater Exchange’s guidance, the investor paid down the high-interest debt suffocating her project, completed the build, and sold the property within 18 months. The outcome? She avoided a financial loss and ended up with a modest gain and zero tax liability due to the compliant exchange. More importantly, she protected her broader portfolio, restored her cash flow, and retained control of her future investments. Breakwater Exchange helped her reclaim stability and financial flexibility when it mattered most.

Receive Liquidity Without Triggering Taxes

Breakwater Exchange specializes in sophisticated cash out solutions that protect your gains and unlock your flexibility. Let’s design a custom strategy built around your needs.

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FAQs About Our Zero Strategy and Cash Out Solutions

Can I use a cash out solution to pay down unrelated debt?

Yes. Breakwater Exchange structures tax-efficient Zero strategies that enable you to pull equity via refinance, perfect for addressing other liabilities or reinvestments.

What happens to my monthly income if I use a Zero?

While Zeros don’t offer current distributions, we’ll balance your portfolio with other assets that do. Thanks to our vast network of sponsors, Breakwater Exchange ensures your income goals stay on track.

Is refinancing during a Zero strategy risky?

Not with Breakwater Exchange. We help structure tax-free refinance options that are pre-planned and backed by secure, long-term lease assets, offering stability and liquidity.

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Breakwater Exchange’s expert guidance helps you maximize returns while minimizing tax exposure, so you can invest with clarity and confidence.

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General Disclosure
All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future performance. There can be no guarantee that any investment or strategy will achieve its stated objectives. Speak to your tax and/or financial professional prior to investing.

Real Estate / 1031 Risk Disclosure
There is no guarantee that any strategy will be successful or achieve investment objectives; Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; Potential for foreclosure – All fnanced real estate investments have potential for foreclosure; Illiquidity –These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments;Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash ﬂow distributions; Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefts. Stated tax benefts – Any stated tax benefts are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.

Opportunity Zones Disclosures
Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings. Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments. Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations. Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available. Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund. Leverage. Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments. Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities. Regulation. It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.