Real estate can be a powerful sleeve in your investment portfolio. Where else, besides real estate, can you leverage someone else’s money (mortgage) to consistently get outsized returns of 40-60% on your cash?[1]
Daniel’s experience with investing in real estate as well as being a financial advisor and tax expert can help take your real estate investing to the next level, whether you’re just starting out, or you’re a seasoned investor looking to cash out and avoid capital gains taxes.
Daniel started investing in real estate in 2018 by renovating his own house and “house-hacking” by living with 3 roommates for 2 years. In 2020 he bought his second house, but kept his first as a rental property. In 2021, he bought 2 more houses and in 2022, he bought a duplex and another house. He currently owns his own home as well as 5 other investment properties. He has grown this decent portfolio from scratch and aspires to own at least 10 single family rentals and after that, venture into the larger multifamily units.
When it comes to real estate investing, it can help to have a coach by your side to help guide you along the way to make the best tax and investing decisions. Here are some things to consider when it comes to real estate investing, and how you could benefit from a financial plan from Upward Financial Planning:
- Knowing how to calculate basis on your property and correctly depreciate it on your taxes
- Bonus depreciation in specific years, for less taxes owed
- 1031 exchange into another property
- 1031 exchange into a Delaware Statutory Trust
- Avoidance of capital gains taxes
- Picking the deal that’s right for you
- Selling a large portfolio of rental properties in one year or over several years and how that affects taxes
- Seller-financing a property for superior returns and….less taxes (sounding redundant yet?)
- Optimization: a financial wellness check to see if you could be doing more, or should scale back
- Individual deal analysis
- Assembling your dream team of bankers, lenders, insurance agents, and contractors
Working with a knowledgeable financial advisor who also has experience investing in real estate can help you take your real estate investing, and investing in general, to the next level. Maybe you have never dreamed of owning a rental property, but with the right guidance, it’s very possible and could be a game changer for your finances. Or maybe you’re ready to cash out of your multi-million dollar real estate portfolio.
Some other questions we can help answer:
- Should I buy my first home or keep renting?
- Should I pay off my mortgage or invest in the stock market?
- Should I sell my former house or keep it as a rental property?
- As a business owner, should I rent or own? Or own, and then rent to my business?
- What’s the best way to sell my business and the building associated with it, as a business owner nearing retirement?
- I have all my money tied up in my properties. Is that okay or should I be investing in other assets as well?
- What blind spots do I have that a professional might see and help me to optimize my situation?
Regardless of your situation, you can benefit from advice from a qualified financial advisor, whether it’s a comprehensive financial plan or on an hourly project basis.
Contact us today for a free consultation to see how the power of financial planning can help.
[1] You put down $20,000 on a rental property. The bank loans you $80,000 for a mortgage. Purchase price was $100,000. You get $12,000/year in rent. That’s a 12% return on the purchase price, but you only put down $20,000, so that’s a 60% annual return on your cash. That’s the power of leverage!