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Achieve Financial Independence with Passive Real Estate Investing: A Must-Read Book for Aspiring Investors

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Passive Real Estate Investing

Are you dreaming of attaining financial independence? Do you aspire to generate a steady stream of passive income to secure your future? If so, passive real estate investing is an avenue worth exploring. In this blog post, we will delve into the world of passive investment and introduce you to a must-read book that can guide you on your journey to financial freedom. Passive Investing: Building Wealth Without Active Involvement Passive investing has gained significant popularity in recent years, offering individuals the opportunity to generate income without actively managing investments. Unlike active investment strategies that require constant monitoring and decision-making, passive investing allows you to grow your wealth through a more hands-off approach. One of the best passive income investments that has consistently proven its worth is real estate. Real estate investments can provide a steady cash flow, potential tax advantages, and long-term appreciation. However, navigating the world of real estate investing can be daunting, especially for beginners. That’s where the recommended book comes in handy. Introducing Passive Investing in Real Estate: Your Guide to Financial Independence” If you’re looking for a comprehensive resource to help you kickstart your passive real estate investment journey, “Passive Investing in Real Estate: Your Guide to Financial Independence” is an invaluable book you should consider adding to your reading list. Written by renowned real estate expert John Smith, this book offers practical advice, insider tips, and proven strategies to help you achieve financial independence through passive real estate investing. Why Read This Book? In-depth knowledge: “Passive Investing in Real Estate” equips you with the foundational knowledge required to make informed investment decisions. You’ll learn about different real estate investment options, understanding market trends, evaluating properties, and mitigating risks.   Building passive income streams: Discover various methods to generate passive income through real estate investing. From rental properties to real estate investment trusts (REITs), the book covers a range of strategies and helps you identify the best ones that suit your financial goals. Practical guidance: The book goes beyond theory and provides actionable steps to get started. It offers insights into financing options, property management, and ways to maximize returns. You’ll gain confidence in your investment choices and develop a roadmap for financial success. Case studies and success stories: Learn from real-life examples of investors who have achieved financial independence through passive real estate investments. These case studies offer inspiration and valuable lessons to apply to your own investment journey. Future-proof strategies: The book addresses current market trends and adapts traditional strategies to the evolving real estate landscape. You’ll gain a deep understanding of how to leverage technology, stay ahead of competition, and adapt to changing market conditions. James Kandasamy’s book, Passive Investing in Commercial Real Estate: Insider Secrets to Achieving Financial Independence,” is a must-read for anyone looking to achieve financial independence through passive real estate investing. This book is not just another dry, snooze-worthy book on investing or a get-rich scheme. Instead, it is a practical guide designed for hard-working, middle-class Americans who want to make smart investments and grow their wealth. In his book, James shares insider secrets on how to be a smarter passive investor, understand the potential of passive investing, grow your confidence in finding and evaluating deals, and ultimately achieve financial independence. By following the advice in this book, you can begin to pursue your passions, serve others, and live the life you were meant to live. Don’t just take our word for it – here are some testimonials from real estate investors of all levels who have already benefited from James Kandasamy’s book: – Raul Medellin: “Excellent book for both the newbie and the seasoned passive investor in Commercial Real Estate. This book will show you the map you need to follow.” – Chris T: “A must-read for anyone looking to invest into a syndication!” – Yan Yan: “I listened to the author’s interview on one of the podcasts. Then I read this book. It walks you through the whole process and tells you all the “secrets” from an insider perspective.” – Joseph Abruzzo: “This book will get you started setting up a good foundation for your investment success in real estate.” – Sheetal: “This simple book from James Kandasamy will get you sophisticated in terms of understanding the world of passive investing in commercial real estate.” – Tazman: “This book is a must-read if you are a passive Investor. James made this book easy to understand and comprehend.” here are some reviews Explore the world of passive investing in real estate with our comprehensive guide, available in both audiobook and physical book formats. Unlock the secrets to successful commercial real estate investments with insights from PassiveInvestingInRealEstate.com and AchieveInvestmentGroup.com. Start your journey to financial growth today! About james kandasamy James Kandasamy is the accomplished CEO of Achieve Investment Group and Brightest Multifamily Investors. He is a notable figure in the industry with a wealth of experience and expertise in commercial real estate. CEO James Kandasamy has also authored the insightful book, “Passive Investing in Commercial Real Estate,” which offers invaluable insights and strategies for investing in this lucrative sector. His leadership and knowledge make him a trusted resource for investors seeking to navigate the world of multifamily real estate. CONCLUSION If you aspire to achieve financial independence through passive real estate investing, “Passive Investing in Real Estate: Your Guide to Financial Independence” is an essential resource that deserves your attention. By following the insights and strategies outlined in this book, you can embark on a path towards building wealth, generating passive income, and securing a brighter financial future. To learn more and start your journey towards financial independence through passive real estate investing, Make an investment in your future today with Achieve Investment Group.

The Dollar Index: Risks and Opportunities for Passive Investors

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Passive Investors

We hope you’re having a fantastic week! In this edition of our monthly newsletter, we will be shedding light on the impact of the U.S. Dollar on passive real estate investing, along with providing you valuable insights and trends to help you make informed decisions in your investment journey. The U.S. dollar has long been the dominant global currency, influencing investment decisions across various asset classes, including passive real estate investing. The dollar’s strength or weakness directly impacts investment returns, property prices, and overall market stability. What is the U.S. Dollar and why does it matter? The U.S. dollar is the world’s primary reserve currency, meaning it is the currency that other countries hold in their reserves. Additionally, the U.S. dollar is the most traded currency globally and serves as the benchmark for many commodities, including gold and oil. The value of the U.S. dollar has a significant impact on the economy and global financial markets. When the dollar is strong, it increases the purchasing power of Americans and allows them to buy more goods and services. However, a strong dollar can also have negative effects on the economy, such as hurting exports and making it more expensive for foreigners to buy U.S. goods. The Impact of a Strong Dollar A strong U.S. dollar can have both positive and negative effects on passive real estate investing. On the one hand, a strong dollar can increase the purchasing power of foreign investors, making U.S. real estate assets more attractive. This can lead to increased demand for U.S. real estate assets, which in turn can drive up prices and increase returns for investors. On the other hand, a strong dollar can also make it more expensive for U.S. investors to invest in foreign real estate assets. This can limit the opportunities available to investors and reduce diversification options. Register For Our Passive Investor Educational Webinar Protecting Your Equity During Uncertain Times Strategies For Today’s Challenging Investing Environment! Jun 22, 2023, 07:00 PM Central Time (US and Canada) SAVE YOUR FREE SPOT As the graph above illustrates, there is a clear correlation between the U.S. dollar index and U.S. real estate prices, with periods of a stronger dollar generally coinciding with rising property prices. 📊 U.S. Dollar Strength and its Impact on Real Estate Investment A strong U.S. Dollar often leads to decreased demand from foreign investors, as the cost of acquiring U.S. real estate becomes more expensive for them. This, in turn, can translate to lower property prices, creating more opportunities for domestic investors. The graph above shows a clear inverse relationship between the U.S. Dollar Index and foreign real estate investments. When the dollar strengthens, foreign investment tends to decrease, and vice versa. 💡 Insights: For passive investors, this presents an opportunity to enter the market at a lower price point, as well as take advantage of potentially higher returns due to lower competition from foreign investors. Fluctuations in the U.S. Dollar can have a profound impact on passive real estate investing, both domestically and internationally. By staying informed of these trends and adapting your investment strategy accordingly, you can minimize risks and maximize returns. Get a Free Copy of my #1 Best-Seller Passive Investing In Commercial Real Estate GET IT NOW

The U.S. Dollar’s Impact on Passive Real Estate Investing: Trends and Insights

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Passive Real Estate Investing

Passive real estate investing has become increasingly popular in recent years, with many investors looking for ways to diversify their portfolios and generate passive income. One of the most popular types of passive real estate investing is multifamily real estate investing, which involves investing in apartment buildings and other multi-unit residential properties. Multifamily syndication, where multiple investors pool their resources to invest in a large multifamily property, is also a common approach to passive real estate investing. Investors are currently facing both potential benefits and drawbacks due to the current strength of the U.S. dollar. However, one factor that can have a significant impact on passive real estate investing is the strength of the U.S. dollar. In this blog post, we will explore the trends and insights related to the U.S. dollar’s impact on passive real estate investing, with a particular focus on multifamily real estate investing and syndication. What is the U.S. Dollar and why does it matter? The U.S. dollar is the world’s primary reserve currency, meaning it is the currency that other countries hold in their reserves. Additionally, the U.S. dollar is the most traded currency globally and serves as the benchmark for many commodities, including gold and oil. The value of the U.S. dollar has a significant impact on the economy and global financial markets. When the dollar is strong, it increases the purchasing power of Americans and allows them to buy more goods and services. However, a strong dollar can also have negative effects on the economy, such as hurting exports and making it more expensive for foreigners to buy U.S. goods. The Impact of a Strong Dollar A strong U.S. dollar can have both positive and negative effects on passive real estate investing. On the one hand, a strong dollar can increase the purchasing power of foreign investors, making U.S. real estate assets more attractive. This can lead to increased demand for U.S. real estate assets, which in turn can drive up prices and increase returns for investors. On the other hand, a strong dollar can also make it more expensive for U.S. investors to invest in foreign real estate assets. This can limit the opportunities available to investors and reduce diversification options. The Strength of the U.S. Dollar and Real Estate Investing The strength of the U.S. dollar can have both positive and negative impacts on real estate investing, depending on the circumstances. When the U.S. dollar is strong, foreign investors may be more inclined to invest in U.S. real estate, as their purchasing power is higher. This can drive up demand and prices for U.S. real estate, which can benefit investors. On the other hand, a strong U.S. dollar can also make U.S. real estate more expensive for domestic investors, as they have to pay more for materials, labor, and other expenses denominated in foreign currencies. This can lower returns on real estate investments and make them less attractive. Multifamily Real Estate Investing and the U.S. Dollar Multifamily real estate investing has historically been a reliable investment option, with steady cash flows and long-term appreciation potential. However, the strength of the U.S. dollar can impact this asset class in several ways. First, a strong U.S. dollar can attract foreign investors to multifamily properties, increasing demand and driving up prices. This can be particularly true in high-demand markets, such as major metropolitan areas. Second, the cost of labor and materials can increase when the U.S. dollar is strong, which can reduce profit margins for multifamily investors. This can make it more challenging to find attractive investment opportunities, particularly in markets with high levels of competition. Multifamily Syndication and the U.S. Dollar Multifamily syndication is a popular approach to passive real estate investing, as it allows investors to pool their resources and invest in large, institutional-quality multifamily properties. However, the strength of the U.S. dollar can also impact multifamily syndication in several ways. First, a strong U.S. dollar can make it more challenging to find attractive investment opportunities, particularly in markets where prices are already high. This can make it more challenging for syndicators to find properties that meet their investment criteria. Second, a strong U.S. dollar can impact the returns that investors receive from multifamily syndication. If the cost of labor and materials increases, this can reduce profit margins and lower returns for investors. Conclusion The strength of the U.S. dollar has a significant impact on passive real estate investing. While a strong dollar can present challenges, investing in hard assets like real estate can help mitigate these challenges and provide stable long-term returns Passive real estate investing can be a lucrative way to diversify your portfolio and generate passive income. However, it is important to understand the impact that the strength of the U.S. dollar can have on this market. By monitoring currency trends and implementing currency risk management strategies, investors can mitigate the impact of currency fluctuations and maximize their returns. With careful planning and management, passive real estate investing can be a valuable addition to any investment portfolio.

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.

3200-Units Foreclosure Key Takeaways for Operators and Passive Investors

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Passive Investors from Houston Multifamily Foreclosure As the whole Multifamily Industry knows, there was a foreclosure of 3200 Units with $229 million of debt in Houston by Arbor Realty from a private Deal Sponsor from Dallas. These properties were bought between August 2021 and April 2022. The Deal Sponsor defaulted on their mortgage payment. The investors from that deal have alerted their friends about the potential foreclosure two weeks before it came out on Twitter . This news eventually came out in Wall Street Journal.  As per Trepp Inc, these properties’ cash flow went from 3.8% to more than 8% due to the rapid interest rate hike by FED. While the interest rate hike by the Fed has caused this property to be further under distress, many other factors have caused these Deal Sponsors to face foreclosure. We have a written 10-series article that we wrote so that any passive investor can learn and avoid investing in this kind of Deal Sponsors. Bridge Loan with No Rate Caps As per the chart below from Howard Mark’s book “The Most Important Thing”, Non-Recourse Bridge Loan stacked with Preferred equity without a rate cap.   As you can see it’s considered the highest risk deal type. Preferred equity is a private institutional group that acts like a lender but holds a second position in the capital stack. Preferred equity usually charges a fixed 12-14% interest rate with 1%-2% when the deal is initiated and exited. Usually, preferred equity is used behind common equity (normal retail investors) to boost back-end profit. It’s also used when the sponsor can’t raise a large sum of equity from retail investors. The pitch to the investor is the deal has a lot f upside that even after paying the fixed return to the pref equity group, there will be a lot more upside to common equity.  I attended a webinar where the presenter declared using preferred equity is the way to do deals in 2021. To survive market fluctuations an operator needs to be disciplined and stick to their stringent underwriting criteria. However, when the buying spree seems to be forever, many operators start to do deals at any cost. This includes taking Bridge loans for a deal that does not have significant value-add. I call it a misuse of loan type. I see many cash-flowing deals with thin upsides were bought using bridge loans. Of course, when the Deal sponsor raises the capital, they declare their deals are value add. The question is how big is the upside? In the worst case, some Deal Sponsors did not even take a rate cap insurance.  After the year 2020 to mid-2022, the value of the multifamily assets has gone beyond its intrinsic value. Fannie Mae and Freddie Mac lenders have almost gone out of business as the only way to make any deal work is to get a bridge loan since it’s a forward-looking upside loan. Furthermore, many Deal sponsors didn’t realize that the rate is variable. When the interest rate skyrockets, most of them are caught unprepared. The smarter and more conservative one invested in rate caps insurance since it was affordable then. The aggressive or less sophisticated Deal Sponsors decided not to buy rate caps due to ignorance or they even can’t raise the capital for equity. Most lenders will require rate cap purchases as a mandatory requirement. In the Houston Foreclosure case, looks like the lender didn’t require the sponsors to buy rate caps. Furthermore, Bridge loans were used for Deals that is not for value add. At Achieve Investment Group, James Kandasamy Texas, we are proud to say that we only have 1 bridge loan (with a rate cap of course) out of our 15 multifamily deals that we have and have done. Even that bridge loan is a true Deep value add deal. We could have done many more deals from 2020 to 2022 by taking Bridge Loans for all kinds of think upside deals as many passive investor capital were easily available. We were well aware that Bridge loans pose risk and need to be used appropriately for true-value add deals. I wrote about this on page 68 of my 2019 Bestselling Book “Passive Investing in Commercial Estate”.    Action Item for Passive Investors For passive investors, it is important to consider passive real estate investing as a potential option, Make a list of your investment to identify bridge loans, whether there are rate caps, when the rate cap expires, and whether the deal has a preferred equity between You (common equity) and the Senior Lender. I am sure you will be surprised! 

AI Investment Tools: Game-Changing Solutions for Real Estate Investors

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Artificial intelligence (AI) technology is now playing a pivotal role in transforming the multifamily housing market. This cutting-edge technology is improving efficiency, maximizing investor returns, reducing costs, and enhancing the overall tenant experience. As such, AI technology is changing the game for Real Estate Investors , passive investors, deal sponsors and operators as well as developers designing and constructing new community developments. Bear in mind, we have no relationship or conflict of interest in presenting these tools, they are simply programs we have witnessed emerging in the space and certainly new AI tools are coming online daily. Your own due diligence in use of any of these tools is advised. CONSTRUCTION AND DEVELOPMENT In construction and development, AI is improving efficiency by streamlining processes such as scheduling, budgeting, and project management. AI-powered construction management platforms such as Smartvid.IO provide easy access to critical insights, enabling developers to make more informed decisions and avoid potential delays. Another type of tool to expect more of is automated design and planning based on tracts of land, and what can be built. Should you build single-unit and ground floor only? Where might parking lots fit? Instead of replacing architects, these technologies can augment efforts and help move projects along faster with inspiration. For instance, one such tool is called ArchiGAN, which is a generative stack for apartment building designs. LEGAL AI technology is also changing the legal landscape for real estate. AI-powered legal services can help property owners and investors streamline their legal documents, such as leases, purchase agreements, and legal due diligence. Newly trained LLMs can even pass the Bar exam, and as an example, “DoNotPay” claims itself as “The World’s First Robot Lawyer”.  As a matter of fact, if you are searching for “Best AI Legal Tools 2023”, you will find an emerging industry that can save you money but should not replace your human legal team. However, services such as AI-powered contract review platform LawGeex allow legal teams to spend more time on higher-level work, reducing the time and cost of legal services. Again, for clarification, people and organizations should always consult with a qualified attorney before making decisions based on the information in this post or using any of the tools referenced herein. ANALYSIS AND DECISION MAKING AI technology makes it possible to leverage large amounts of data to gain insights that can inform decision-making. Investing in AI-powered tools like Google’s TensorFlow can provide data-driven insights that can direct decision-making related to rent pricing, marketing strategy, and property operations. Another example is Cody, an AI assistant. Cody is an intelligent AI assistant like ChatGPT, Bard, or GPT4 – with the added benefit of being able to train it on your business, your team, your processes, and your clients with your own knowledge base. Use Cody to support your team, answer questions, help with creative work, troubleshoot issues, and brainstorm ideas. RESEARCH AI is also revolutionizing the research process in the multifamily housing market. AI-powered tools such as AssetSonar can gather and analyze a broad range of data on properties and neighborhoods, including zoning and demographic data. These tools provide investors, operators, and developers accurate and up-to-date information that informs their investments and development decisions. One such example is turning your PDFs into chatbots, then simply asking your PDF questions to get answers summarized and delivered instantly. Some tools you might try are PDF Analyzer, ChattyPDF, or Ask Your PDF. For instance, why scour for details about K1’s when you can let a chatbot explain the intricate details in a simplified, quickly understood format? Or, simply use it for effortless organization and watch your document transform into a structured outline automatically. MARKETING AI technology also plays a significant role in the marketing of multifamily housing offerings. AI-powered chatbots can provide an excellent tenant experience, provide 24/7 support, and answer tenant questions. AI-powered chatbots and tools such as Rentlytics can provide insights into the customer journey and help operators identify the most effective marketing channels. When it comes to executing marketing strategies that include graphics, audio, video, social media and more, it is actually difficult to keep up with so many tools coming online. Every day there are more and more powerful tools, and considering some like Adobe are trained on LLMs that feature copyright protected libraries, it is worth considering where your tools are pulling their “influence” from so you don’t end up drawing off scraped and protected art that can come back to you such as copyrighted works, fonts, etc. LEASING AI technology streamlines the leasing process by reducing the workload of property managers and leasing agents. AI-powered leasing tools such as Leasera reduce friction such as application processes and digital approvals, speeding up the leasing process. AI algorithms can analyze vast amounts of data to develop scoring for tenant applications, even conversing with potential new applicants via chatbots and SMS to ‘nurture’ them along as leads, such as LEA, the AI leasing agent. PROPERTY MANAGEMENT (PROPTECH) AI-powered property management systems can help property managers automate tasks such as maintenance requests and payment bills. Platforms like CBRE provide built-in AI-powered chatbots that can help reduce tenant turnover rates. Property management systems powered by AI such as Rentigo generate automated rent payment reminders to help ensure on-time rent payment by tenants leading to reduced late payments and better cash flow management for property managers. Another way to use it is implementing communications tools such as Fathom, which plugs into ZOOM, Google Meetings, Microsoft Teams and other video platforms to annotate meetings, create transcripts, and even summarize meetings with different speakers noted and highlighted meeting points of importance. Look for more multifamily Proptech tools using AI to: Manage your real estate portfolio Organize your rental property operations Manage rent rolls and finances Manage leases and affordability compliance Communicate effectively with tenants, managers, and investors MORE MORE MORE! There are just so many AI tools coming online, multifamily operators need to experiment and see what will work best for themselves.  In multifamily … Read more

Passive Real Estate Investing Tax Benefits

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Passive Real Estate Investing is a strategy that seeks to create a stream of passive income by purchasing real Estate and renting it out. This is similar to Passive Income; however, in this case, you use your own money to purchase Real Estate instead of investing other people’s money. Passive real Estate investing involves owning rental properties and letting someone else manage them. You earn income from the rent payments, but you don’t have to do any of the day-to-day management of the property. The passive income tax benefits of investing in real Estate are substantial. Investing in real Estate allows you to deduct up to $25,000 from your taxable income each year. This deduction is called depreciation and can be claimed on residential or commercial property. Passive real Estate investing is often considered the simplest way to make money with your properties. It’s also much easier than buying a home, fixing it, and selling it. When you invest in a property as a passive investor, there are no repairs or improvements to worry about. Instead, you can find a good deal on a rental property, sit back, and collect monthly checks from renters. Passive Real Estate Investing Tax Benefits There are potential tax benefits to investing in real estate, including multifamily properties, through a passive income strategy. When you invest in real estate, not only do you receive a larger return on your investment, but you also have the potential to save money on taxes. The following are some of the more common tax benefits of passive RE investing: Tax Savings: When you buy real Estate as an investment, it may be taxed as ordinary income or as capital gains. No special tax breaks and deductions are allowed if it’s taxed as ordinary income. If it’s taxed as capital gains (which is usually preferable), then you can potentially save money by paying lower rates on long-term capital gains rather than ordinary income tax rates Mortgage Interest Deductions: You can deduct mortgage interest payments made on loans used to finance investment property; however, the limit is $1 million per year total across all mortgages Depreciation Deductions: You can deduct depreciation from your rental income before calculating your taxable income. Depreciation is an expense related to owning real Estate, but it’s not an actual cash outlay. Instead, it’s an allowance for the wear and tear on your property over time due to normal use, maintenance, and repair costs. You don’t have to pay taxes on depreciation because it’s not cashing in hand — it’s just an accounting method for tax purposes. Tax-deferred growth: When you invest in a traditional IRA, 401(k), or other retirement accounts, you defer taxes until withdrawal. However, with an investment property, you can defer taxes during the holding period and any improvements made to the property. You can also deduct depreciation on any major improvements made to the property or building. Losses and write-offs: When you buy a property, its value can change over time — sometimes quickly. Real estate investors may see their properties increase in value over time, but they must also be prepared for losses if the market turns worse. Fortunately, the IRS allows investors to deduct losses from their income taxes in most cases. Passive Real Estate Investing Tax Benefits FAQs What expenses can I write off as a passive real estate investor? As a passive real estate investor, you may be able to write off certain expenses related to your rental properties against your rental income. These expenses can include the following: Property management fees Maintenance and repair costs Insurance premiums Taxes and assessments Interest on a mortgage or other debt related to the property Legal and professional fees, such as for a property manager or attorney Utilities and other services provided to tenants Advertising and marketing expenses to find tenants Travel costs for managing the property, such as for inspections or meetings with tenants It’s important to keep detailed records of all rental property expenses, including receipts and invoices, to support any deductions you claim on your tax return. You should also be aware that there may be limits on the amount of expenses you can write off, and some expenses may not be deductible. Consult with a tax professional for guidance on the specific deductions you can claim. How do I calculate the depreciation deduction for a rental property? The depreciation deduction is a tax benefit that allows investors to recover the cost of a depreciable asset, such as a rental property, over time. To calculate the depreciation deduction for a rental property, you will need to determine the following: The property’s basis: The basis of a property is typically its purchase price, plus any additional costs, such as closing costs and improvements, that add to the property’s value. The property’s useful life: The useful life of a property is the amount of time it is expected to be used for business or income-producing purposes. The useful life of a rental property is typically 27.5 years for residential properties and 39 years for nonresidential properties. The property’s depreciation method: There are several methods for calculating the depreciation deduction for a property, including the straight-line method and the declining balance method. The straight-line method spreads the basis evenly over the property’s useful life. In contrast, the declining balance method allows for a larger deduction in the early years of the property’s life. Once you have determined the property’s basis, useful life, and depreciation method, you can use the following formula to calculate the annual depreciation deduction: Annual depreciation deduction = (Property basis) / (Property useful life) x (Depreciation method factor) For example, if you purchased a rental property for $200,000, with $20,000 in closing costs and improvements, for a total basis of $220,000, and you use the straight-line method with a 27.5-year useful life, your annual depreciation deduction would be: Annual depreciation deduction = ($220,000) / (27.5 years) x (1) = $8,000 Note that this is just an example, and … Read more

How to Find a Mentor for Real Estate Investing

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Mentors are a valuable resource for real estate investors. If you are new to the industry, finding someone willing and able to help can be challenging. For some people, real estate investing can be a bit intimidating. If you’re new to the game and don’t know what you’re doing, it can be tough to figure out where to start. Perhaps the best way to approach real estate investing is with the help of a mentor. A mentor will have been through the process before and can advise you on how to get started, what mistakes to avoid and how to succeed at your goals. What Is a Real Estate Mentor? A mentor is a professional who helps guide, advise and teach another person. They can come from many different areas of life and are generally someone who has been through it all before you. A real estate mentor is someone who has been in the industry for a while, has made their mistakes, and now wants to help others avoid making them too. They will know all of the ins and outs of the business because they have been around for a long time and experienced everything firsthand. A real estate mentor will help teach you how to invest in property, buy it for yourself, and sell it for profit. They will show you how to analyze properties, find good deals and make money on them once they are purchased. A real estate mentor can help you avoid common mistakes, keep you on track and provide guidance when things get tough. It’s important to remember that a mentor doesn’t have to be someone who has been investing in real estate for decades; they need to have experience in your particular niche of real estate investing. There Are Many Benefits of Having a Real Estate Mentor: Learning from their experience: The best way to learn about real estate investing is by doing it yourself. However, there will always be things that happen that you couldn’t possibly anticipate or prepare for when starting on your own. Having someone with years of experience in the industry can save you time and money by helping guide your decisions along the way. Avoiding mistakes: A mentor’s job isn’t just to teach; it’s also to protect their mentees’ interests by preventing them from making costly mistakes that could reduce their profits or even ruin their business altogether. Someone who knows what they’re doing can help keep things running smoothly without spending time figuring out solutions on your own! Is It Good Time To Invest In Real Estate? Identify the Real Estate Mentorship Program You Want Finding a mentor for real estate investing is one of the best ways to learn about the industry. A mentor will help you build your skillset and knowledge, which can help you be more successful in your business. The first step in finding a mentor is identifying the type of mentorship program you want. There are many different types of programs available, including: Individual Mentorships: These are one-on-one relationships where you have a specific person who will provide guidance and support throughout your journey into real estate investing. Online Courses and Community: These online courses offer mentorship opportunities through community forums and other resources. Online Forums: You may be able to find mentors who are willing to answer questions on forums like BiggerPockets or The Real Estate Forum. If they don’t already have their threads, they may be willing to answer questions through private messages (PMs). Online groups: Many online groups have forums where investors share advice and tips on how to succeed in real estate. These are great places to find mentors willing to answer questions or share their experiences. Books: The internet offers many free resources for real estate investing, but books will always be one of the best ways to learn about any topic. If you want to learn more about flipping houses or wholesaling properties, check out some of our favorite books on the subject below: Investment Opportunities For Accredited Investors Conclusion Real estate investing can be a great way to build wealth, but it requires a fair amount of experience and research. Luckily, a mentor or real estate investment club can help you learn about the market and make intelligent decisions. Of course, you’re guaranteed to make mistakes along the way, but with time, you’ll learn from your mistakes and grow exponentially. Join Us For A Daily 60-second Coffee Break Series For Passive Investing In Commercial Real Estate With James Kandasamy, The Best-selling Real Estate Author And Mentor.

How to Analyze a Passive Real Estate Investing Deals

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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