INVESTING

Real estate goes beyond just buying, renting, or selling. Investing in real estate gives you an additional way to build wealth over time.  Flipping a home or purchasing a rental or commercial property enables you to build generational wealth and leave a lasting financial legacy. Let us help you explore your options to see what investment path is right for you.   

What’s so great about buy and hold?

Buy and hold is the strategy investors use when they purchase property and rent it out. They are “holding” it. This is an excellent way to make money over time in real estate. 

The key points to this strategy are:

• buy homes at fair market value or less (when possible)
• make repairs/updates and make the home market ready
• place a rent paying tenant – we can help!
• utilize the rent from the tenant to pay down the mortgage
• the home appreciates (grows in value) — you make money
• the rent reduces your mortgage obligation (you owe less) — you make money
• the rent increases over time and begins to surpass your mortgage payment (cash flow increases) — you make money

Why is “build to rent” such a hot topic right now?

Build to rent is when a builder constructs homes for the purpose of selling them to investors who will hold them as rentals. Investors are attracted to new construction homes as rentals (another form of “buy and hold”) because the maintenance costs are very low for the first 7-10 years. This strategy is seen largely in the outlying suburbs where land costs are low and builders can construct suitable homes for under $250,000. Trish Beeman works with many builders throughout the state and can help you find the best place to buy “build to rent” properties.

What is a 1031 exchange?

A 1031 exchange references a portion of the tax code (IRS section 1031) that investors can use when they want to make a change in their portfolio and defer the tax burden. When a property has been held as an investment it is subject to capital gains taxes when the property is sold. Those taxes can be deferred using a 1031 exchange. This means that instead of selling the property for cash, investors will exchange the property for another, and not pay taxes at the time of the exchange. The exchanged properties must be investments, but they do not have to be the exact same type of investment. So, an investor could exchange a rental house for an office building. Or a storage facility for a vacation rental. 1031 exchanges must be done by a qualified intermediary (a middle person) who will ensure that the client is not accessing the capital from the sales during the exchange. We can help with this!