Real Estate (Real Estate Success Tips)
Real estate investors must master many skills. Successful real estate investors usually master due diligence, market timing, federal income tax reduction, property tax reduction, specialized knowledge for a property type, and property management.
Real estate investment requires proper due diligence. Prior to purchasing a property, the real estate investor needs to research the physical plant, financial performance, rent roll and the real estate market trends.
Real estate investors reduce federal income taxes using cost segregation. This specialized tax practice allows real estate investors to increase real estate depreciation by 50 to 100% by stratifying the depreciation schedule to include five year, seven year, 15 year and 27 1/2 year (rental residential property) or 39 year depreciation (commercial property). Cost segregation is financially feasible for real estate with a cost basis of at least $500,000.
Timing is crucial for successful real estate investment. The best time to buy is after it is clear the market has started to recover. It is time to sell when the initial signs of weakness occur in the rental market. Executing the sale of real estate is not instantaneous. If you start to sell when signs of weakness appear, you should be able to execute a sale before the market declines sharply.
Real estate investors aggressively manage property taxes. Property taxes are not an expense which is simply paid. Real estate investors aggressively pursue property tax reduction using both administrative and judicial appeals.
Real estate investors develop specialized knowledge by focusing on one type of property. They don't dabble in apartments, office, retail and office warehouse properties. They develop a breath and depth of specialized knowledge by focusing on one type of real estate.
Real estate management is dull but necessary. It is the nuts and bolts of finding tenants, collecting rent, minimizing operating expenses and maintaining an orderly property. In some cases, it is possible to outsource real estate management. However, most real estate investors need to learn how to manage property.
Most successful real estate investors periodically visit their properties. Developing new properties or pursuing new acquisitions is more exciting than visiting properties. However, you can develop an in-depth, accurate understanding of your properties, the markets and neighborhood trends through reports and phone conversations.
Monitoring and controlling operating expenses sounds like a job for a bean counter. However, many of the nation's largest and most successful real estate investors are notorious for aggressively pinching pennies regarding operating expenses. In many cases, it is possible to obtain meaningful reductions in operating expenses by reviewing the levels of staffing which are necessary and obtaining multiple bids for the largest line item expenses.
Much wealth has been gained through real estate investment. Despite the promises of "get rich quick schemes" by late night purveyors of tapes and videos, real estate success is usually earned through years of hard work, prudent decisions and attention to operations. In real estate, like in most other businesses, paying attention to the details materially impacts the bottom line.
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Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.
City:
- Miami, FL
- San Francisco, CA
- Hartford, CT
- Los Angeles, CA
- Atlanta, GA
- Memphis, TN
- Tampa, FL
- Philadelphia, PA
- New Orleans, LA
- Baltimore, MD
- Ft. Lauderdale, FL
- Des Moines, IA
- Jacksonville, TN
- Albuquerque, NM
- Cincinnati, OH
- Scranton, PA
- Tulsa, OK
- Chattanooga, TN
- Providence, RI
- Madison, WI
- Sacramento, CA
- Virginia Beach, VA
- San Diego, CA
- Little Rock, AR
- Akron, OH
- Portland, OR
- Columbia, SC
- Grand Rapids, MI
- El Paso, TX
- Wichita, KS
Cost segregation produces tax deductions for virtually all property types.
Property Type:
- Community shopping center
- Retirement home
- Drugstore
- Department store
- Bowling alley
- Multifamily
- Daycare center
- Service center warehouse
- School
- Shopping center
Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.
Industry:
- Textile mills
- Furniture manufacturing
- Metal manufacturing
- Printing activities
- Apparel manufacturing
- Air transportation
- Warehousing and storage
- Nondurable good wholesalers
- Wood product manufacturing
- Food and beverage stores
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