3 Tools Real Estate investors in Warner Robins are Using As A Safe Haven
Investors are always looking for better and safer ways to grow their money. Your nest egg is for retirement, not to gamble. Real estate has always been a preferred options that give good returns and provide a lot of ways to invest. Flipping houses, managing rental properties or trading mortgage note are all tangible ways to park your money. Here are some of the tools real estate investors are using to create their wealth.
Investing in Real Estate Market trends.
The first way investors are using real estate in Warner Robins Ga as a safe haven is to start investing. Investors use rental properties, land, commercial buildings and multi-unit apartments as a safe place to park investments when the economy is down. Like the stock market, Real estate always tries to climb (and it usually does). Investors will catch a good deal in a down market and follow the trend to a profitable sale.
Trends in the real estate market are slow, but more predictable and tend to yield safer returns. Even if the market does not trend as well as expected, the property can still be rented for cash flow.
There are also market trends to follow in the different sectors as well. Office buildings may loose demand while mobile homes climb.
The second way investors in Warner Robins use real estate as a safe haven is to take advantage of the 1031 exchange. The 1031 section of the tax code allows an investor to trade similar investments for other investments without getting taxed on the sale of the asset they are giving up.
This tax benefit can be very helpful for investors that need to sell assets without taking a tax hit. The investor can move into another investment tax free like a retirement account. Examples of a 1031 exchange include; a residential house for a duplex, timber land for an apartment (it may require a tax attorney to justify this one, but it can be done).
The third way investors are using real estate in Warner robins as a safe haven are the tax laws in general. Real Estate is full of tax advantaged laws. Here are a few;
- Section 121- sale of your personal residence within 2 of the last five years, capital gains is tax free up to…
- Section 1031 exchange- like-kind exchange
- Depreciation- deduct a percentage of the improvements of your investment property over 27.5 years.
- Step up basis- an inherited property can have a step-up in non-taxable basis (Ex.- Dad’s $30K house appraised for $125,000 when he died. I can now sell it for 125,000 or less and pay no tax.)
Many Warner Robins investors are starting to learn how to use Self-Directed IRA’s. Certain Individual Retirement Accounts (IRA) can be opened that allows the account holder to have checkbook control. This means, under certain guidelines, the account holder can invest in tangible assets like gold, coins and Real estate.
SDIRA’s are just like other IRA’s. They can be traditional (tax deferred) or Roth (After tax rules). This is a very powerful way to grow a retirement in real estate.
Depending on your level of real estate investment experience these tools can be used on your very next real estate investment.
One of the biggest ways that investors grow wealth safely is knowing the tax laws. Most of these tools utilize the tax laws to their advantage.
If you are thinking about adding real estate to your portfolio, but don’t know anything about where to start, contact us. We specialize in residential real estate, but we have an extension network of investors we work with that can get you started in almost any sector you like.