Achieve Investment Group

Fire, Snow, And 2.4x Returns – The Story

Chapter 1: The FIRE At around 01:00 AM on March 26, 2019 – I, James Kandasamy received a phone call from my property maintenance supervisor to inform me about the fire at Alamo Park Apartments, one of my investment properties in San Antonio. When I asked him if anyone had been hurt in the fire, he confirmed that no one was. The building was quickly evacuated just before the fire caused the roof to partially collapse. But the third floor was totally destroyed, and an extreme amount of water severely damaged the first and second floors there and he suggested I come take a look. I sent a text to my insurance agent letting him know about the situation, then left right away. https://www.youtube.com/watch?v=9vs5jnQRH1U Chapter 2: Fire Restoration & Apartment Remodeling That Almost Took a Year When a fire or other disaster strikes a rental property, it can be traumatic for the tenant, the owner, and anyone else who has a stake in the property. On March 26, 2019, we experienced a fire in my rental property. The process of repairing everything and getting back to normal took over a year. During this period, we completely transformed the apartment building using some smart remodeling techniques. Demo Day After Fire https://youtu.be/m_rZ-yWEAtQ Finally Coming Back to Life https://youtu.be/uVf-PFQ_rbk Chapter 3: The Turnaround Alamo Park Apartments was unarguably the best MF investment experience I ever had as a syndicator. The 25-unit fire, Covid-19, the record freeze and bursting pipes…a lot of curve balls in this deal but we pulled it through like a champ is nothing short of a miracle! Chapter 4: Texas Winter Storm URI Alamo Park was hit hard during the Texas Winter Storm URI in Feb 2021. The property had the largest claim of Insurance loss in the entire state of Texas. The recovery and repairs to a significant number of units caused us a lot of repair work and resident dissatisfaction. The team at Achieve Properties work tirelessly to repair multiple pipe burst across multiple buildings to ensure that water services are not disrupted.  Both the Fire and Winter Storm damage caused our insurance cost to skyrocket in the next few years. The great news is we recently sold this 309 units apartment with a total passive investor return of 2.48x equity multiple within 4 years. That is like 37% per annum cash on cash return for our passive investors. That means, that if you invest $100K you would have received $248K after 4 years.  As promised the numbers are mind-blowing.     Subscribe to receive updates on our latest investment opportunities. Button: Become An Investor[/vc_column_text][/vc_column][/vc_row]

Understanding Your Schedule K-1 and Real Estate Taxes

Passive Real Estate Investing

If you own real estate, then you probably know that your property taxes are deductible as a real estate expense. But did you know that when it comes to Schedule K-1, the form used to report your income from a pass-through entity such as an S corporation or partnership, there are some things you might not know about? The purpose of Schedule K-1 is to help determine whether you have a gain or loss on the sale of an investment property or rental property. When you bought the property, you invested some money in it. When you sell it, that money has been “capitalized” (turned into income) via depreciation deductions (which reduce taxable income). The Schedule K-1 helps to determine whether those capitalized costs are more or less than what they were when you purchased the property, which will determine whether there’s a gain or loss on the sale. What Is Schedule K-1? Schedule K-1 is a tax form that is issued by the Internal Revenue Service to individuals who have invested in real estate partnerships, limited liability companies or other entities that earn rental income. Investors are required to report the income earned from these investments on their individual tax returns and use Schedule K-1 as an attachment to do so. Schedule K-1 is also used when a partner in a partnership or S corporation sells property to the entity or receives compensation for services rendered to the entity. The IRS requires investors who receive this type of income to report it on Schedule K-1, even if they have already reported it elsewhere on their tax return. Schedule K-1 contains three columns: one for each of your investment properties. You’ll need to fill out a separate Schedule K-1 for each one of your properties, even if they’re all owned by the same entity or individual partner. If you own multiple properties through different entities, you will need separate Schedules K-1 for each property. Who Files Schedule K-1? Schedule K-1 is a tax form that is used by real estate investors and individuals who earn rental income from other sources. This form reports how much money was received from each property over the course of the year, as well as certain expenses related to that property. Schedule K-1 is used to report the income and expenses of each property that you own. If you rent out a single home or apartment building, then this won’t apply to you since there’s just one owner on the deed. However, if you own multiple properties or have several investors in an LLC or partnership involved in real estate investing, then it makes sense to use Schedule K-1 instead of including everything on your personal tax return. What Is K-1 Distribution? When you sell a rental property, you’ll typically receive a 1099-S tax form from your real estate agent. The 1099-S is used to report the proceeds from selling a rental property. However, there are some instances where you might not be required to file this form. If you’re a single-member limited liability company (LLC), then your LLC will be taxed as if it were a sole proprietorship. That means it’s subject to self-employment tax on net income instead of double taxation like corporations are. In that case, you’ll need to file Schedule E with Form 1040 and report any income or loss from your rental properties on Line 21 of Schedule A. If your total amount of passive activity income exceeds $100,000 for the year, then you’ll also have to file Form 8582 and Form 8825 as well. However, if you own multiple rental properties through an LLC or corporation and they’re all operated by someone else or through an organization such as a partnership or limited liability partnership (LLP), then you won’t need to file Form 8582 or Form 8825 because the IRS treats each entity separately for tax purposes rather than combining them together into one entity. How To Read The K-1? When you are in the process of buying real estate, there are some things that you need to know about. The K-1 is one of these things that you need to know about. The K-1 is a form that will be sent to you by the seller’s accountant. This form is used for reporting income from real estate sales and rentals. The K-1 can be difficult to understand, but it is important that you do understand it because it relates directly to your tax liability when buying real estate. Here are some tips on how to read the K-1: Know what kind of property you are buying – You need to know what kind of property you are buying so that you can determine which type of K-1 form will be sent out by the seller’s accountant. If there are any questions regarding this, talk with your real estate agent or attorney before signing anything. Know how long you have owned the property – If you have owned the property for less than 12 months then it should not matter how long you have owned it for because capital gains taxes will not apply until after 12 months of ownership has passed. However, if this does not apply and capital gains taxes do apply then make sure you talk with your real estate agent or attorney. When Is The K-1 Due? The K-1 tax form is due on or before April 15th for the previous year. For example, if you bought a rental property in June of 2021, then your K-1 tax form must be filed by April 15th 2022. In most cases, the seller will provide you with the correct date to file your K-1 form. If they do not provide it to you and you have questions about when to file your K-1 tax return, then please contact us and we will be happy to help you out. Important K-1 And Tax Filing Information For Private Real Estate Investors Private real estate investors are responsible for … Read more

Tips and Tricks of Investing in Syndications using your IRA

Today, Michael Tortorich will be joining our weekly show.

Michael Tortorich has a Bachelor of Business Administration and an MBA from the University of Texas at Austin McCombs School of Business. He has 10-plus years of corporate finance experience and most importantly is a passionate believer in promoting financial literacy. The content in this book was originally designed as a financial education course for his two children, but after completion, he decided to turn the material into a book that anyone could benefit from.

How to Analyze a Passive Real Estate Investing Deals

Passive Real Estate Investing Deals

Real estate, which includes land, homes, offices, and retail structures, is a popular investment option for those who like to put their money into tangible assets. Many investors pick real estate as a source of income or because it is relatively simple to borrow money to purchase homes. Passive real estate investing is the act of owning rental properties that generate income without you having to be involved in the day-to-day management and operation of the property. If you’re a passive real estate investor, you don’t want to spend your time running around trying to fix a leaky faucet. You want a team of professionals behind you who can take care of all that stuff for you—and that team generally comes from a professional property manager. Look for a company with a proven track record and good references from other investors. The first step in analyzing a passive investment is to determine whether it’s an equity or debt offering. From there, you can evaluate the deal using cap rates (for debt) and using cash-on-cash returns (for equity). If you’re considering both types of investment opportunities, keep in mind that each has its pros and cons. Debt deals may provide steady income streams with a guaranteed return of capital at the end of your term; equity deals, on the other hand, can provide larger returns over the long term through appreciation and distributions from operations. What Is Passive Real Estate Investing? Passive real estate investing, also known as non-active investing, refers to a type of real estate investment that does not require direct involvement from the investor. In this form of real estate investment, the investor can enjoy cash flow from rent received without becoming involved in the day-to-day management and responsibilities of owning rental properties. Passive real estate investing is sometimes called “hands-off” investing because it requires little or no hands-on work by the investor. Passive real estate investments can take many forms, including real estate investment trusts (REITs), syndications, and crowdfunding platforms. To analyze a passive real estate investment, you should consider the following factors: Location: Is the property located in a desirable area with strong rental demand? Property condition: Is the property well-maintained, or will it require significant repairs? Potential return on investment (ROI): What is the potential for rental income, and how does it compare to the cost of the investment? Management: Who will be responsible for maintaining the property and finding tenants? Will you be required to be actively involved in the management of the property, or will you be a passive investor? Risks: What are the potential downsides, such as vacancy risk or the risk of natural disasters? Tax implications: How will the investment affect your tax liability? Analyze Real Estate Investment deals Let’s walk through it, so you can see what I mean. Let’s walk through it, so you can see what I mean. To begin, the process, the first step is education. This is the time when you, as a passive investor, get educated on the deal. You learn that the deal sponsor has a deal and that they’re seeking passive investors for it. Then, you learn what the deal itself consists of. Often, this information on the deal will come to you from being on a deal sponsor’s email list and receiving a notice from them of the upcoming deal. In learning about the deal itself, you’ll probably join the deal sponsor for some sort of presentation. As a deal sponsor – and a friend to numerous other deal sponsors – I can tell you that presentations are the norm when sponsors wish to communicate their deals to interested passive investors. Your commitment – if you chose to make it – would be to “softly” pledge to put money in the deal sponsor’s deal. In this case, “softly” means that you’re not making a rock-solid, binding commitment to invest $__.___ in the deal sponsor’s deal. That kind of commitment could be one you make later. Yet for now, you’re just making a “soft commitment” to keep yourself in the running, to potentially participate in the deal. Let’s begin the discussion with a look at metrics. Metrics are what you’ll use to measure your potential returns from a deal. They’ll allow you to see whether the deal will produce healthy or unhealthy returns. Metrics will also help you to make the right decision when faced with investment opportunities that all look good. To start on metrics, here’s an example. For this example, suppose you were presented with the following three opportunities: Deal 1: A deal where you’d put in $100,000; receive $8,000 cash flow each year for 5 years; and then in the 5th year, earn returns when the property was sold for $200,000. Deal 2: A deal where you’d invest $100,000; receive $3,000 cash flow per year over 5 years, and then get another payday from the sale of the property in year 5 for $250,000. Deal 3: A deal that has you invest $100,000; receive NO returns for the first year; watch as the property is refinanced for $50,000 cash out in year 2; receive $2,000 cash flow per annum in Years 3, 4, and 5; and at last receive returns when the property is sold for $200,000 in year 5. Cash Velocity  Deal 1 Deal 2 Deal 3 Total Investment $100,000 $100,000 $100,000 Operational Cash Flow Y1: $8,000 Y2:$8,000 Y3:$8,000 Y4:$8,000 Y5:$8,000 Y1: $3,000 Y2:$3,000 Y3:$3,000 Y4:$3,000 Y5:$3,000 Y1: $0 Y2:$50,000 Y3:$2,000 Y4:$2000 Y5:$2000 Sales Price $200,000 $250,000 $200,000 Of those three opportunities, which one is best? It depends on what metrics you’re looking at. (For the sake of simplicity, look only at those metrics for the time being and ignore any buying or selling costs (i.e. closing costs, broker fees, etc.)). Now, getting into those metrics, we can start with the cash-on-cash return. It’s the simplest metric to understand when assessing your returns from a deal. cash on cash return = Annual Cash Flow/Total Investment  In those three … Read more

Things You Might Not Know About Your Schedule K-1 And Real Estate Taxes

Things You Might Not Know About Your Schedule K-1 And Real Estate Taxes ​What Is Schedule K-1? Who Files Schedule K-1? What Is K-1 Distribution? How To Read The K-1? How Is K-1 Income Taxed For Real Estate Investors When Is The K-1 Due? Schedule K-1 Form Sections You Should Know Important K-1 And Tax Filing Information For Private Real Estate Investors and many more things.