The strategy of a real estate investor may vary on the results they want to obtain and their overall objective.
Some investors want to have real estate as a long term investment that will provide growth of both passive residual income and increase value of the asset.
Other real estate investors are in it to make larger upfront income that they can realize today and not in the future.
A third group of real estate investors will utilize both strategies depending on what makes the most sense for their situation.
Majority of the investors that we deal with like to make the upfront money and once a property is sold will take down a new home.
My personal belief is that real estate is a great way to make money now but also to hold a portion for long term investments.
Over the years I have held over 20 homes for rent plus had 6 multi unit apartment complexes.
During this time I have experienced the good, the bad, and the ugly with long rental properties and have a better understanding of how to operate them without losing my marbles.
In future articles I will dive in deeper on how to avoid some of the pitfalls of being a landlord.
Unless the real estate investor is an expert on short or long term capital gains and other tax implication from these types of investments we recommend that you enlist the services of a CPA.
A professional tax preparer understands these regulations and how they will effect your situation on real estate investments.
Many investors always tell me that they don't want to pay capital gains (no kidding..
..
show me a person that loves to pay taxes and I will show you a fibber).
My response is typically "...
the good news about paying capital gains is that means your making money.
" Nobody likes to pay taxes but if you work with a tax professional they can help minimize the amount of taxes by applying the proper deduction, credits, and depreciation concerning your investments.
Investors can also use strategies that will defer taxes such as 1031 exchanges or self directed IRA's.
Check out my upcoming articles in which I will explain these strategies in greater detail.