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Over the last few years, we have been focused on our retirement accounts or should I say, focused on growing our retirement funds to allow us to enjoy the same level of living we do today.
This focus is a constant evaluation of IRA funds, properties owned, income requirements, and desired spending we plan to need. It’s all centered around how much growth we can obtain over the next 10-40 years.
As our investment properties ARE an integral part and large portion of our retirement plans, it makes sense they are at the top of the list when it comes to scaling and growth of them. In order to grow and scale, we need to use tactics that allow us to dodge and avoid capital gains taxes whenever possible.
We are attempting to create a legacy of properties for our children to either continue to grow and scale for their own retirement income or provide a large windfall of inheritance for them to do what they please with. The last thing we want to do is create a situation where they have to pay enormous taxes on our legacy.
So, Kevin had a large portion of farmland that was gifted to him by his grandmother. At the time of the gift, the land was not worth a whole lot but as investors know, appreciation is a wonderful thing! After he looked into the value of the land today, Kevin was pleasantly surprised at the value. What he was not pleasantly surprised at was the amount of capital gains taxes he would have to pay if he sold the property outright.
What option did Kevin have to avoid these taxes? A 1031 exchange! So, we did a lot of research and started the process of selling the farmland and purchasing a multifamily 4-plex worth more than double the value of the land.
A 1031 exchange is only as complicated as the timelines and can prove to be a very stressful process should those timelines become tight, which is what happened to us.
Would we do a 1031 exchange again? You’ll have to listen to our story on this podcast and find out!
LINKS:
Bigger Pockets is a great resource for real estate investors. They have created a huge community and their site is filled with educational forums, blogs, and podcasts all about the investing side of rental property investments. Click HERE to learn more.
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As an unofficial “Part 2” to Episode 7 (A Guide to Move Outs and Security Deposits), this episode is all our best tips for a smooth tenant move in.
Where move outs are important to process properly with regards to the security deposit, the whole procedure for prepping and organizing for a new tenant to move in is just as crucial to follow.
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We are starting to break down the processes we use to give other landlords some guidance on where to start with their rental property business. This is just a continuation of us working to get other landlords into the positive mindset and professional outlook required to take their rental property investments to the next level.
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As we are landlords who promote professionalism and a business mindset, this episode is a prime example of how to embrace these outlooks.
Too many landlords take the hands-off approach, thinking their tenants don’t want to be bothered. That the less contact they have with the tenant, the better. Maybe they won’t move out, maybe they won’t ask us for any improvements, maybe they won’t complain. Guess what? By avoiding the tenants, you’re ignoring your biggest asset, your rental property.
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Routine maintenance is of utmost importance when owning rental property and Spring is the best time to get in there to inspect the structure and landscaping. In this episode we cover in detail all aspects of what to inspect on the exterior of the building from the roof to the basement, and landscaping to fences.