Real estate is one of the best ways to achieve financial freedom. Real estate affords you certain benefits that can help build your wealth. Things like depreciation, capital gains, and leverage.
Depreciation allows you to offset the income from the property. For example If you buy a Multi-Family property worth 1 Million dollars you may have actually paid $200,000 for the dirt and $800,000 for the improvements. The IRS expects that you will depreciate the property, so you will divide $800,000 by 27.5 which is the the amount of time in years you are permitted to claim the depreciation for. $800,000/27.5 = $29,090 so each year you get a paper loss of $29,090. Most of the time when you hear about top earners paying little or no income tax depreciation is one of the reason.
When working a w2 job you are taxed at the ordinary income tax rate any where from 10 to 37% depending how much you earn. Capital gains is fixed at either 15 or 20%. When you hold an investment for more than 365 days and make a profit on that investment you are tax not at an income rate but at the much lower capital gains rate. That is much less then the top income bracket of 37% and it’s even under the 22% bracket of most middle class earners.
If you were looking to buy 1 Million dollars worth of Diamonds / Gold/ Art you would need 1 million dollars. If you were looking to buy 1 Million dollars of real estate you would need $250,000. This is another great benefit of real estate. The use of leverage allows you to control much more real estate then it would of common stock or other assets for the same out of pocket expense.
We concentrate our investments to Greenville, South Carolina. Where we work closely with property management, bankers and brokers to uncover those hidden gems. Those hidden gems are Multi-Family properties that have differed maintenance or have been mismanaged. This will permit us to implement our systems of asset management, revive the property to stabilization, refi our initial investment out and acquire additional properties.
Multifamily offers economies of scale. So we now have fewer roofs to worry about, Fewer tax bills and insurance policy’s. We can also take advantage of bulk discounts. Go to any contractor and tell them we have one kitchen that needs a face lift, now tell him we have 20 all on the same property. Makes a big difference to your per unit cost on everything from doorknobs to thermostats to flooring and labor.
Greenville, South Carolina has a diverse economy with powerhouse companies like Michelin, BMW and GE. Greenville also has big city amenities without giving up the small town feel. It sits at the foothills of the Blue Ridge mountains which offer some great outdoor activities and also has the 20 mile long Swamp Rabbit that is used by more than half a million pedestrians and bicyclist annually both for recreation and commute purposes.
Some of Greenvilles Accolades:
Fourth fastest growing US city in 2017
Named to the Top 100 best places to live in 2018
Population growth of 1.75% per year since 2010
Named as one of the top 10 “best downtowns” in the US
Steady Job Growth of 1.5 – 2% annually for the last 5 years
Largest County in the state with a population of 500,000+
Strong School District ranked a B+ and 11th out of 81 statewide
If you would like to learn more about how we think and the way we go about creating our systems I invite you to join us on our Blog