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Passive Real Estate Investing: Tax Benefits You Can’t Afford to Ignore

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Passive investing has become increasingly popular in recent years, particularly in the real estate market. Passive real estate investing allows investors to generate passive income without actively managing a property. This strategy has proven to be a great way to earn a steady stream of income and build wealth over time. However, one aspect that is often overlooked is the tax benefits that come with passive investing. In this article, we’ll explore the tax benefits of passive investing, and how you can maximize your returns. Understanding Passive Investing Passive investing is a strategy that involves investing in assets that generate a steady stream of income without requiring the investor to actively manage the asset. In the real estate market, this can include investing in rental properties, real estate investment trusts (REITs), or crowdfunding platforms. Unlike active investing, passive investing doesn’t require investors to have hands-on involvement in managing the property or making decisions about it. Passive Investors and Taxes Passive investors enjoy several tax benefits compared to active investors. For example, the income generated from passive investments is typically taxed at a lower rate than active income. Additionally, passive investors can take advantage of tax deductions and credits that aren’t available to active investors. Passive Real Estate Investing and Tax Benefits Real estate is a popular asset class for passive investors, and it also offers several tax benefits. Here are some of the tax benefits of passive real estate investing: Depreciation: Depreciation is a tax deduction that allows investors to write off the cost of the property over time. This deduction reduces the investor’s taxable income, which can result in significant tax savings. Capital Gains Tax: When you sell a property for a profit, you are required to pay capital gains tax. However, if you hold the property for more than a year, you can take advantage of lower long-term capital gains tax rates. 1031 Exchange: A 1031 exchange allows investors to defer capital gains tax when they sell a property and use the proceeds to purchase another property. This allows investors to reinvest their profits into another property without paying taxes on the gain. Best Passive Income Investments for Tax Benefits Here are some of the best passive income investments for tax benefits: Real Estate Investment Trusts (REITs): REITs typically generate income through rental income and capital appreciation of their properties. As a shareholder, you can earn a share of the rental income generated by the properties without having to own or manage them directly. REITs also offer several tax benefits, including deductions for depreciation and interest expenses. Crowdfunding Platforms: Crowdfunding platforms allow investors to pool their money together to invest in real estate properties. These platforms offer passive investors the opportunity to earn a share of the rental income without having to actively manage the property. Crowdfunding investments also offer tax benefits, including deductions for depreciation and expenses. Dividend Stocks: Dividend stocks are stocks that pay dividends to shareholders. These dividends are typically taxed at a lower rate than regular income, making them an attractive option for passive investors. Maximizing Your Returns To maximize your returns from passive investing, it’s important to understand the tax benefits that come with it. By taking advantage of these tax benefits, you can reduce your tax bill and increase your net returns. Additionally, it’s important to choose the right passive income investment that aligns with your financial goals and risk tolerance. Conclusion Passive investing offers several tax benefits that can help investors maximize their returns. By understanding the tax benefits of passive real estate investing and other passive income investments, investors can reduce their tax bill and increase their net returns.

2.55X Returns – Most Creative Apartment Deal

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You might have heard about our multi-million dollar real estate deals & their success stories of how the passive investors who invested in these deals became millionaires. But, there’s a lot that goes into making any deal a success. And for the first time ever, I James Kandasamy going to share the “Behind the scenes” of one such success story – SOL Apartments in San Antonio, TX. This was the most creative apartment deal that we have done so far. We bought an Apartment and land beside it to solve a parking problem that existed for the past 60 years. We combined both to create one plate of land. We learned about the entitlement process in this deal Two different sellers closed on the same day. Story of the Deal Found using Broker Relationship – Listed website We have Boston Woods Apartments Nearby This Deal had been in and out of contract 4 times > The issue was parking was a 1:1 parking ratio > The last contract was $5.5m for the Apartments. > Seller was frustrated Fully exterior rehab completed and interior ongoing. Has been 80% occupied from 2012-2017 How did we solve the Parking Problem? Apartment Broker Did suggest looking at vacant lands beside the Apartment But didn’t want to do anything with it or the deal. Did mention that previous buyers were able to contact the land owners. North Side vacant Land owner asked for $1m The previous under-contract buyer negotiated to 500K The Previous buyer pulled the plug last minute due to the risk of converting vacant land to improved land with parking.   The only way to make the deal work was to buy one of the Vacant lands and build some parking lots. but How do we Mitigate the Risk of the City not Approving The Vacant Land conversion to a parking lot? How did we mitigate the Risk? Before Going under contract Spoke to the City officer about the feasibility of Converting the North Side vacant Land to a Parking lot Found out the Parking Ratio requirement. Talked to the City Administrator to ensure all align. The city was supportive and gave verbal “OK” Gone through the city code of development. Hired a Civil engineer Walked with the Engineer Meeting- Civil Engineer/City to get verbal “OK” Understood the process of conversion Parking Lot contractors Vacant Land Conversion Challenges? Engineering Surveys Boundary Survey – for platting the vacant land. Once the land was platted, then it was merged with the apartment. New Large Plat was recorded. Improvement Survey –Parking lot expansion. To determine driveway, # spots, Building corner, etc. Tree Survey – Determine the type of Trees and size To get approval from the City to cut the trees. ALTA Survey – for the Bank that shows A new survey for the Bank. All needed to be approved by the City.   Land Developments Since we positioned this as an “Improvement” and not a New Development. There was no new code Parking ratio requirement. We were able to fit 35 parking spots. (1.3 ratio). We decided to add Playground for residents Dog Park – WIP A Nice Park area for residents   Resolved Parking Issue Brought in much higher paying Demography Household with two cars or more. No more concern about limited parking. Brought up occupancy from 80% to 90% easily. We started charging for covered parking. The only apartment complex with a park in the submarket. Families with children — Playground and Park. The Sale We recently sold SOL Apartments for a total passive investors return of 2.55x equity multiple within 4.5 years. That is 34% per annum cash on cash return for our passive investors. That means, that if you invest $100K you would have received $255K after 4 years. A few more passive investors millionaires were created by James Kandasamy Texas.   The Morale of the Story Value add may not be increasing rent or reducing the expense Creative methods and Risk-taking can bring in huge value Congratulations to our investors who put their trust in us.  We are grateful for your support. If you want to invest with us join our mailing list by clicking the button below. Join Our Investor List