Investors are always looking for ways to invest their money and feel confident and secure in their decisions. Historically, the real estate market has been a relatively safe place to invest their money. It is a relatively slow-moving market with indicators of positive and negative trends. The 1031 Exchange laws are only one great way to protect against capital gain penalties and taxes. There are also many tax advantages to owning real estate. Here are three ways investors are using real estate in Eugene as a safe haven.
Investing in the Real Estate Market
The first way investors are using real estate in Eugene as a safe haven is to simply invest in the real estate market. They are liquidating their assets out of the stock market and investing in real estate rental properties, including single-family and multi-family properties. This market is perceived to be stable and is usually completely unrelated to the stock market trends. Rental properties are a great way to make reliable, steady returns from investments. There is a huge audience in the market looking for rental properties and knowing how and what properties to choose from is another battle all in its own.
The second way investors are using real estate in Eugene as a safe haven is to take advantage of the 1031 exchange, trading properties for other properties of like use but of greater value. Using this strategy, investors are spared from capital gain taxes. Using the 1031 exchange laws coupled with depreciation and other tax strategies will save investors from not only the capital gain taxes but other taxes in general.
The third way investors are using real estate in Eugene as a safe haven is to take out tax-free loans against their property and keep real estate and exemptions that go along with it. Serious real estate investors can utilize multiple tax laws to never pay taxes or gain penalties on their real estate. You must be certain to follow all guidelines to stay in compliance. If you are not 100% familiar with the stipulations, feel free to give us a call.
Yet another way to utilize real estate as maybe the greatest investment of all times and at a extremely low risk is to owner finance your current property to another buyer or investor. We like to start with structuring a 5% down payment, 5% interest only payment and no less than a 5 year balloon payment to close the loan out and pay off the seller. The advantages here are 1. The seller gets to postpone capital gains until the final note is paid in full. 2. The down payment is taxed at the capital gains rate. 3. The monthly installment payment is interest only, therefore it is only taxed at the regular income level and not at capital gains rate because there is no principal payment made. 4. With interest only payments, you still get the limp sum sale price at the end of the contract period. All these benefits are the notes to a beautiful song for the seller AND the buyer.
Other tax-free or tax-deferred strategies may include investments in various accounts, including SDIRA’s (or Self Directed Individual Retirement Arrangements) where you can make contributions to funds to invest in real estate and not be taxed on the money invested. This investment strategy has restrictions. There are contribution limits per year and a restriction on who you can work with, buy for and sell to. Inidvidual Retirement Accounts (IRA’s) are usually investments into the stock market, but SDIRA’s can be used for a wider variety of investments including residential property and multifamily properties that can be used as rental properties, commercial property, vacant land, and even foreign property! What a great way to set up for retirement.
Depending on your level of real estate investment experience and who your network of real estate professionals and investors are, you can network find the best strategies to work out ways you and your investments can get the most out of the various laws and options available to you to make the wisest decisions and use real estate in Eugene or OR in general as a safe haven. Anyone can take advantage of these strategies! If you do not have a large network yet, or even if you do, give The Flip Sharkz a call today at 541-780-2424 to discuss your investments and ways other investors are using real estate in Eugene as a safe haven. We can help you figure out the best way to utilize investment strategies and leverage tax laws to your advantage. We can also help you find your next investment properties in Eugene to utilize these strategies. If you are not up to tackling on such an investment and would still like to play the investor angle, then just give us a call and we can do all the heavy work for you and you can make a nice return just the same!