Favorite Investment

Favorite Investment Side Dish

Recently, Morningstar asked readers to tell them about their favorite investment side dish. Not the main-course core holding that anchors a portfolio, but like Thanksgiving, the satellite or supporting player that adds that little bit of spice and diversity.

 We liked one response: I am glad that I have ignored the naysayers who say there is no need for real estate funds in a diversified portfolio.’

Many readers consider real estate an appealing side dish. For some, this exposure is attained through a mutual fund, while others said they prefer physical properties.

Now there is a new tax change expected to be released in 2015 that makes real estate investing even more attractive. Amanda Han at Bigger Pockets writes, “The government effectively raised the deductible amount of depreciable assets from $500 to $2,500. As such, when investors make improvements to properties or buy assets for the rentals, they may be able to take an immediate tax deduction instead of needing to depreciate it over many years. The net result is a potentially larger tax write off in 2015 to generate a higher tax refund.”

“Let’s go over an example. Let’s assume Tom is a real estate investor who owns several rental properties, which are single family and multi-family units.

“Let’s assume that Tom’s tenants in the multifamily have been complaining about the old washers and dryers in the units. Tom was on the fence about replacing the old appliances because he knew it would be a large cash outlay. Tom was thinking about purchasing 50 washers and 50 dryers for $800 each. However, based on the old tax rules, Tom would generally need to depreciate the $80,000 asset purchases over 5 years, which delays his tax write-off.

‘With this new tax break, Tom is now able to potentially deduct the entire $80,000 of appliance purchases immediately in 2015 because each item is under the $2,500 threshold. Assuming that Tom is in the 40% tax bracket between federal and state income taxes, the new tax change can result in $84,500 of IMMEDIATE tax deductions increasing his refund by close to $34,000!’

If you are considering investing in real estate through your personal savings or retirement vehicles, like a 401(K), we know that you demand more than promises or secured” returns – such as those with private mortgages. We know that that isn’t enough to entice private investors like you to the opportunities we possess.

We would like to show you our track record. How we generate strong returns on investments in foreclosure houses and commercial short sales. You will find that returns generated are very high, and we pay a good return to a private investors as we profit handsomely ourselves.

We know you want a strong margin of safety, and we can deliver that because we buy for such a low prices that even further adverse market conditions will not likely impede long terms gains.