Seeking Anonymous Company Ownership? Here's How To Hide Your LLC

The main reason you might want to know how to hide ownership of a company is to prevent lawsuits.

I'm going to talk about the concept of anonymity, and one of the most effective tools for maintaining your status as a real estate investing ninja is the Anonymous Trust. When set up correctly, the anonymous trust can be extremely effective at hiding ownership of your corporation/LLC—which in turn prevents you from being sued.

Here are three simple steps you can follow to hide company ownership and prevent lawsuits.

Step #1: Form an Anonymous Trust For Your Business

The Series LLC reduces your liability exposure, which effectively limits the potential damage a lawsuit can do to you. What it doesn't do is stop the lawsuit from happening in the first place. On the other hand, an anonymous trust can. If you truly want to make your company litigation proof and protect your assets, you need an anonymous land trust.

The probability of a lawsuit happening is based on three separate components: legal, factual, and financial.  An anonymous trust will attack each of those motivating factors. What this does is reduce the chance of a lawsuit happening in the first place.

Step #2: List Your Anonymous Trust as a Member of Your LLC

Yes, believe it or not, you can do that, at least in America. (You have several options when it comes to structuring your business assets.) Anyway, this tactic targets the financial component of a lawsuit.

Why? 

Because lawsuits only happen when a plaintiff believes they have a reasonable case for seizing assets to cover damages. If there's nothing they think they can seize from you, they won't sue you. 

The anonymous trust structure enables you to hide company ownership by listing your company as a member in your LLC’s Articles of Incorporation. Another advantage of an anonymous trust is that you don't have to file it with the state. This means the people who want to sue you won’t be able to access your ownership information in the public records.

There will be nothing to associate the assets with your name, shielding you from potential legal action.

Note that you can use this strategy with any type of LLC, including the Series LLC.

Step #3: Allow Uncertainty to Work Its Magic

People sue you because they want your money. Most of the time the people suing you have little to no money in the first place. And if they don't have enough money they can't pay a lawyer to sue you.

People usually get around this obstacle by offering their lawyers part of the settlement. This means it's up to the lawyer whether or not you get sued.

If a lawyer is uncertain about whether you own assets worth anything, they won't waste their time trying to sue you. After your anonymous trust is in place it will be next to impossible for someone to determine what you own. 

No lawyer is going to spend months or years trying to figure out what you own, period. I would know, I'm an attorney myself.

I hope you enjoyed this article. If you want to hide company ownership, make sure you do it right. To learn more about setting up an anonymous trust, visit our Land Trust hub or take our investor's quiz and find out if engaging with us is a good option for you.

Land Trust Mortgages: How To Borrow Money Using a Land Trust

I’ve been harping on for years about the importance of setting up a land trust for your real estate investments. Today I want to touch on one of the issues many real estate investors struggle with – how to borrow money using a land trust.

There are times when you may want to borrow money to make improvements or preserve assets held in a land trust. There may also be a need to refinance the property at some point. You need to make sure that the trust has the power to borrow money. It may not always be the case and this is normally covered in the trust deed.

Let me get right into the mechanics of it all.

What Do I Need to Get a Mortgage Loan Using a Land Trust?

The first step you’ll need to take is to have the trustee sign the mortgage or note. However, you will need to apply for the loan and sign the guarantee or the note since the trustee won’t be signing personally.

Alternatively, if you have your property in a land trust already and want to borrow money against the beneficial interest, then the lender will need to serve a Notice of Collateral Assignment on the trustee. The trustee will then write an acknowledgment of the assignment.

When this happens, the trustee is no longer able to transfer title of any property held in the trust or encumber or mortgage the property without the lender’s written consent.

Here are the five things the lender will be looking for when granting the loan:

  1. The lender will need to review the trust instrument.
  2. The lender will need to confirm the grantor and trustee identities.
  3. The lender will need to establish whether the trust grants the trustees power to borrow money and pledge or encumber trust assets.
  4. The trustees may be required to sign a trustee certificate reciting some key terms of the trust and confirming the authority of the trustees to take out a loan.
  5. The bank will need evidence that the property is actually owned by the trust. For this, you will be required to provide the deed on record for review.

If you’re seeking to obtain a loan against trust assets, you need to consult with an expert trust administration attorney. You do not want to take any action that might potentially harm the assets of the trust. 

You may also be interested in our article that answers the question, "Can I take a loan from my S Corp?" 

How Real Estate Investors Utilize Whole Life Insurance

Whole Life Insurance policies are permanent solutions that offer a wide range of benefits and perks. They are financial tools that help solve needs like:

The cash value account is an investment vehicle within the policy where a portion of premiums are invested and accrues interest over time. The policyholder can access this money while still alive by taking out loans against the policy or cashing out the policy entirely if needed. Before doing anything with the cash value in your life insurance policy, consult your trusted life insurance professional and CPA to learn the consequences of cashing out your policy.

What Is A Whole Life Insurance Policy?

Whole Life Insurance is a type of permanent life insurance that is considered the safest place to put your money due to the guarantees set out in the contracts. These policies have a leveraged death benefit that accrues a cash value that you can utilize for outside investments while your money is still participating in the growth inside of the life insurance policy.   

Advantages Of Whole Life Insurance Policies

The main advantage of Whole Life insurance in your financial planning is SAFETY. Life insurance is a contract that comes with guarantees. The insurance company guarantees certain returns, benefits, and protections as long as the premiums are paid. Those benefits are on a case-by-case basis, and life insurance is about solving each client's specific issues, problems, or desires.  

First, determine the death benefit amount. How much insurance are we buying in year one or over the course of the client's lifetime? This value is the determining factor for how much money is put into the policy. The death benefit also dictates the majority of the cost basis for the plan and controls how much money is distributed when the client dies.

Second, life insurance can be an investment vehicle and financial planning aide.   

There are disadvantages to consider with whole life insurance policies, such as urrender fees and tax implications for early cash-out.

How To Use The Cash Value In Your Policy

You have a few options to use the cash vaule in your policy. Each option has pros and cons outlined below.

Working with a knowledgeable, trusted, licensed, and educated insurance agent is the best way to get the outcome you desire.

Tax Implications Of Whole Life Insurance Policies

Whole life insurance policies have several tax implications to be aware of: 

Real Estate Investors And Whole Life Insurance Policies

One huge advantage of using the cash value component of a whole life insurance policy for real estate investors is that it can act as a source of financing:

This loan can be an attractive option for investors who need help securing financing through traditional channels, such as banks or mortgage lenders. Also, the policy loan is not considered income, so it does not incur taxes.  

Policy loans are collateralized against life insurance. They do not count towards your DTI, so they don’t affect your ability to qualify for loans. In fact, life insurance can help you qualify for more loans as life insurance is in your asset column and makes you more able to pay for your debts.  

Additional Considerations

Comparing the advantages and disadvantages of using the cash value component of a whole life insurance policy versus other investment vehicles is crucial for real estate investors: 

These investment vehicles do not offer the guaranteed death benefit that whole life insurance policies provide.

Key Takeaways

A whole life insurance policy may be worth considering if you want to save your money safely, let it grow, utilize it while it grows, and pass it on in ways you would not otherwise be able to. Whole Life insurance provides a safe, guaranteed place for your money to be utilized, grow, and pass on.  

Understanding Split-Dollar Life Insurance: What You Need to Know

In a rapidly changing financial landscape, split-dollar life insurance plans have become a tool for business owners, high-net-worth individuals, and sometimes employees. 

First, every split-dollar plan involves an agreement between two parties–typically an employer and an employee or business owner and themselves–sharing the cost, benefits, and ownership of the policy. 

The company pays the premiums, but the insured is the policy beneficiary and can borrow against its cash value while still alive. Other benefits of split-dollar plans are the ability to maintain flexibility, and are customizable to suit the individual needs of different parties. If you are looking for ways to lower your tax bill while also creating financial protection for yourself and your family, a Split-Dollar plan should be something that would be valuable to your financial toolkit.

What Is A Split-Dollar Life Insurance Plan?

Split-dollar life insurance is a contract where two parties agree to split the expenses and advantages of a permanent life insurance policy. Real estate investors can utilize split-dollar plans to offset their tax liability while maintaining access to their money, which provides notable benefits in lowering costs while at the same time increasing your financial stability, creating extra income that you can utilize during retirement tax-free and pass on to your children.  

Working with a qualified CPA, Attorney, and Life Insurance agent, the money that would have been considered as regular income is “split” between personal and corporate income. This is the starting point for tax savings. We then use a Cash Value life insurance policy tailored for cash savings and growth, not death benefit, to hold the money as income for the corporation. The owner and beneficiary of the said policy can use the Cash value as they see fit. This setup is somewhat simple. However, it is highly regulated and commonly audited which is why the policy formation must be prepared and administered by qualified professionals.

Example Of A Split-Dollar Life Insurance Plan

Imagine John, a successful entrepreneur who has a pretax income of $200,000 that he pays to himself from his company. John is tired of losing so much of his income to taxes and sees value in leaving a legacy of financial security to his family. So John decides to work with a group of professionals to create what tax savings he can.

With the plan in place, John will continue to take $86,000 as regular income lowering his personal income from 32% to 22%. The remainder of his $200,000 income will be dispensed into a C-Corp specifically set up for this purpose. His C-Corp will realize the $114,000 as income and pay corporate income taxes on that money. Instead of paying 24% and 32% in income tax had John taken that money as personal income, the C-Corp pays 21% and lowers John's tax debt. At this point, John can’t touch the money, and if he does, he has to pay personal income tax on it.  

Once the taxes have been paid, the C-Corp will purchase a Cash Value Life Insurance Policy on John, and one of the benefits of this Cash Value policy is that John can access the money inside of the policy “tax-free.” This Life insurance policy is not your regular, “I want life insurance” policy. It is a highly customizable, adjustable, and unique policy that is built specifically for the purpose of these plans.

So the net benefit is that John pays less in taxes, maintains access to the money, and builds a financial nest egg in the form of a life insurance policy that not only offers a way to pass on what John has worked so hard to build, but also acts as leverage for John to grow and expand financially, at a rate that he wouldn’t have otherwise.   

Advantages Of A Split-Dollar Life Insurance Policy

Split-Dollar Life Insurance plans contain a lot of advantages for those who are capable of utilizing the structure. The parties involved in a split-dollar arrangement come to an agreement to share in the costs of the plan and thus share in the benefits. If you are the sole proprietor of your business, then you are splitting the benefits with yourself. If your business operates as a partnership, each partner can set up their own split-dollar plan.  

Split-dollar life insurance policies benefit those who want to:

Disadvantages Of Split-Dollar Life Insurance

There are some drawbacks to split-dollar life insurance, including the following:

When evaluating whether split-dollar life insurance is right for you, consider and understand the following:

Key Takeaways

A split-dollar plan is an arrangement between two parties to share the costs and benefits of a permanent life insurance policy. The benefits of a split-dollar life insurance policy include:

In conclusion, a split-dollar insurance plan can be an excellent fit for a real estate investor. Schedule a meeting to review all the key points, including the benefits and drawbacks of the plan.

This article has been written for educational purposes only and is not financial advice nor a recommendation for anyone to utilize the strategies discussed herein. Work with certified Tax and Financial advisors to determine the right solutions for you and your financial situation.   

Secure Your Family's Future with Term Life Insurance

Term Life Insurance is designed to protect you and your family for a specific period of time. These specific terms are usually anywhere from 10-30 years. Term Insurance is a straightforward option for providing lots of coverage at a very affordable cost.

It might be the perfect option if you're looking for a reasonably priced way to protect your family. It provides temporary coverage at a fixed price, making it affordable and flexible. Considering both the advantages and disadvantages before investing in a policy is essential.

What Is Term Life Insurance?

Term Life insurance is a legal and binding contract between the policyholder and an insurance company. These policies usually have a length of time clause ranging somewhere from 10-30 years. Should the policyholder pass away during this specified period the insurance company will pay the specified sum of money to the beneficiaries of the policy holder. A good life insurance policy will also include LIVING BENEFITS, these offer coverage for things such as chronic, critical, and terminal illnesses such as heart attacks, strokes, or cancer. They can also be used for long term care. 

During the specified term the policy holder typically pays a level premium into the policy and if anything happens to the policy owner the policy will pay out what is called the death benefit.  Triggering events for a payout can also include such things as critical illness, disability, and long term care. Which means that you could get money while you are still alive to help pay for what could be catastrophic medical and long term care expenses.

Policy Characteristics

Why Is It Attractive?

Many people find term life appealing because it offers significant coverage at a reasonable price. Unlike permanent life insurance policies, term life policies have no cash value and are less expensive in terms of paying for death benefit  than whole life insurance.  Added on top of that all proceeds from life insurance are tax free.  Which means that your loved ones get everything that you wanted to leave them.

Term Life Insurance offers flexible coverage from annual renewable terms all the way up to 30 years. It is designed for and meant to help individuals and families cover the costs of living should you lose your ability to provide for your family due to death or critical illnesses. The money can be used to pay off mortgages, fund children's college tuition, or help reestablish your life after the crushing loss of a loved one.

Current market trends also drive more people to purchase term life policies. 

How Does It Work?

Decide how much insurance you need by following one the 4 calculation methods, DIME, 10x annual salary, 4% rule, or $50,000/child/year until 18, college tuition costs, and payoff mortgage.

After getting approved and having a policy in place, should anything happen to the policy holder the specified beneficiaries will submit a claim to the insurance carrier and will be paid out the death benefit.

If the policy owner has a triggering event while they are alive that is covered through the critical, chronic, terminal, disability, or long term care sections of the policy the insurance carrier will pay out the specified portion of the death benefit to the policy holder.

Benefits of Term Life Insurance

Potential Drawbacks

The Pros And Cons

Pros

Cons

Factors To Consider When Purchasing

Consider several factors, including age, dependents, and financial goals:

Key Takeaways

Regarding financial security, buying a term life insurance policy is an option for the budget-minded investors who aren’t ready for the financial leverage that permanent life insurance policies can offer. It's essential to remember that it is temporary and won't accumulate any cash value over time.

It's crucial to consider variables like:

Don't wait any longer - schedule a meeting with our team today. With our expert advice, you can make informed decisions about your investments and ensure that you protect your assets from potential risks or disasters.

Syndication: Deal Structuring Secrets

A private placement memorandum is a legal document companies use to raise funds from private investors or venture capitalists. For real estate syndication, the deal structuring document outlines the terms of the investment opportunity.

Watch Seth Bradley, Esq. discuss PPMs in great detail on Episode #59 of our Royal Investing-Strategic Growth Membership. 

Summary Of The Offering In Syndication

The Summary of the Offering refers to a crucial section of a PPM. It's used in real estate syndication to give potential investors an overview of the investment opportunity.

The purpose of the Summary of the Offering is to provide:

The Summary comes immediately after the cover page and the table of contents. It grabs the reader's attention and provides a concise overview of the investment opportunity.

Offering In A Real Estate Syndication PPM

An offering in this context refers to the opportunity for investors to purchase shares in a real estate syndicate and:

506(c) vs. 506(b)

506(b) is a popular exemption for real estate syndicators because it allows for up to:

However, some limitations exist on how those non-accredited investors may learn of the investment opportunity.

One significant aspect of 506(b) is that it prohibits general solicitation and advertising, which means you can only market the investment to people you have an existing relationship.

506(c) is another regulation used by real estate syndicators that allows them to solicit investment offerings to anyone without limits on how many accredited investors they can accept.

Unlike 506(b), syndicators using 506(c) advertise publicly and attract investors through various marketing channels.

Importance of "Use of Funds" In A Syndication PPM

The "use of funds" section is crucial in a real estate syndication PPM, as it outlines how the syndicate uses investors' money.

The "use of funds" section typically includes expenses such as:

Real Estate Syndication Private Placement Memorandum: Company Section

The "Company" section is a critical component that outlines important information about the company offering the investment opportunity.

The Company section typically includes the following information:

Key Elements Typically Included In The Management Section Of A PPM

The management section of a PPM document typically includes the following key elements:

The management section is essential as it provides insight into how the syndicate: 

Private Placement Memorandum: Business Plan Section

The business plan section of a PPM outlines the syndication's investment objectives, strategies, and plans to achieve the set goals.

Below are the essential components of the business plan section:

Deal Structuring: Fees Section Overview

A PPM typically includes a fees section, which details all the fees associated with acquiring, managing, and eventually disposing of the property.

Acquisition Fees

This fee covers the expenses incurred during the purchase of the property. These expenses include legal work, due diligence, and other transaction costs.

Management Fees

This compensation goes to the syndicator or a property management company that oversees the property's day-to-day operations, including leasing units, maintenance, and repair work.

Disposition Fees

This fee covers the expenses incurred during the sale of the property.

Asset Management Fees

Asset management fees go to the syndicator for overseeing the investment and managing the property's overall performance.

Other Fees

Other fees may include legal expenses, accounting fees, and additional regulatory costs associated with the syndication process.

Distributions In A Real Estate Syndicate PPM

Different types of distributions can be included in a PPM, including:

  1. Preferred return refers to the fixed rate of return paid to investors before the general partners.
  2. Equity splits refer to how profits divide between the general and limited partners.
  3. Waterfall provisions specify the order in which profits distribute to different classes of investors.
  4. Capital accounts track investors' contributions to the investment.

It is essential to understand the different types of distributions included in a real estate syndicate PPM, as they can significantly impact the overall return of the investment.

Deal Structuring: Risk Factors

This section aims to disclose any material risks to potential investors so they can make informed investment decisions.

The section should divide into three categories:

Industry risks pertain to risks that affect the real estate industry.

Company risks relate to risks specific to the company offering the securities, such as management and financial risks.

Risks related to securities are inherent in investing in the securities themselves, such as lack of market liquidity or regulatory changes.

Importance And Relevant Contents Of Investor Suitability And Qualification

This section helps protect the interests of both the issuer and investor by ensuring that only suitable investors who can bear the investment risks should participate.

To determine investor suitability, the PPM includes critical concepts such as:

Deal Structuring: Significance Of The Subscription Agreement

The subscription agreement section of the PPM outlines the specific investment opportunity offered to the subscriber. This section typically includes information on the following:

The subscription agreement also outlines the rights and responsibilities of each party involved and may include the following:

Importance Of The Operating Agreement: Syndication Private Placement Memorandum

The operating agreement is a crucial component of the PPM as it sets out the rules and regulations governing the operation of the syndication.

Other Significant Provisions

In addition to the above, the operating agreement should also address other significant provisions, such as the following:

Deal Structuring: Key Takeaways

A private placement memorandum (PPM) is a legal document companies use to raise funds from private investors or venture capitalists. It is an offering memorandum that outlines the following:

Knowing how to navigate a PPM ensures you syndicate deals benefit you. Do you want to learn more about real estate syndication investing? Sign up for our weekly FREE Group Mentoring.

Syndication: SEC Compliance

Syndication SEC compliance involves various rules and regulations investors must follow. Real estate syndication put simply is a group of investors pooling their money together. They use the capital to purchase and manage real estate that is usually beyond their ability to acquire independently. 

The investors form a legal entity like an LLC to buy and manage the real estate. Investors receive profit in proportion to their investment from the following: 

Watch the Royal Investing video featuring securities attorney Stephen Slawinski who specializes in helping real estate sponsors raise capital and stay compliant with the SEC. 

What Is SEC Compliance?

The U.S. Securities and Exchange Commission (SEC) sets regulations and laws that investors must follow. The laws protect investors from fraud and ensure that publicly traded companies provide accurate financial information. Companies file reports with the SEC to demonstrate their compliance. 

Rules And Regulations For Syndicates Under The SEC

The SEC requires syndications to comply with laws concerning securities selling. Syndications remain compliant by following the regulations controlling private placements found in SEC Regulation D. 

Rules And Regulations

Strict rules control a syndication's organization and property transfer. Additional SEC rules for real estate syndicates include the following: 

Syndication: Securities And Non-Securities 

Securities represent financial value and can be traded on a public exchange: stocks, bonds, and options. Non-securities are investments not typically sold on a public exchange, like art and some real estate.

The syndicate's structure determines if your investment is a security or a non-security:

The significant difference is that securities must follow SEC regulations, while the same rules do not bind non-securities.

SEC Compliance: Registration, Exemptions, And Deal Structures

Four acts affect syndications. We'll discuss each and how to avoid the implications of each act. 

Securities Act Of 1933

Under this law, it's unlawful to sell or offer to sell a security without registering the security with the SEC unless the security is exempt from registration. 

Avoid the implication by:

Exemptions under Regulation D, Rule 506(b):

Exemptions under Regulation D, Rule 506(c):

Securities And Exchange Act Of 1934

This law makes it illegal to "effectuate" the sale of a security or accept compensation for the sale of a security as an unregistered broker-dealer. 

The implication is difficult to avoid because selling interests to your company or passive investors is probably "effectuating" the sale of a security. 

Exemptions to this rule appear in Rule 3a4-1.

The Investment Company Act Of 1940

This law stipulates that a company "engaged … in the business of … trading securities" must register with the SEC. 

Avoid the implication:

The Investment Advisor Act of 1940

The law dictates that acting as an investment adviser is unlawful without registering with the SEC. 

Avoid the implication with a direct ownership interest in real estate.

Exemptions:

SEC Compliance: Syndication Structure

JV Structure

Property owned by

 The structure might not be a security if each partner has an active role. If it isn't a security, no other security laws apply. 

Basic Deal Structure

Property owned by 

A basic deal structure helps with the acts in the following ways:

Watch the video to learn more about the Fund of Funds structure.

SEC Compliance Key Takeaways

Deal structure impacts SEC legal compliance requirements. The SEC has a specific definition for what constitutes security and non-security. When investing in a real estate syndicate, you'll want to:

Ready to learn more about real estate investing? Join Royal Investing for weekly meetings to level up your investing education.

Compound Your ROI With The 1031 Exchange

Are you a real estate investor looking to increase your return on investment (ROI)? A 1031 exchange may be the answer. 

A 1031 exchange, a like-kind exchange, is a tax deferment strategy that allows investors to swap out an investment property for another and defer capital gains or losses. Instead of paying taxes on the sale of your property, you can reinvest the proceeds into another property and continue to compound your ROI.

At our Royal Investing Summit, Dan McCabe, Co-founder and President of Exchange Resource Group, shares his 40 years of experience in handling 1031 exchanges and how they work as an investment strategy. 

In this blog post, we'll discuss what a 1031 exchange is, how it works, and what rules you need to follow to take advantage of this powerful tax deferment strategy. 

How Do You Defer Capital Gains Tax With A 1031 Exchange?

When selling an investment property, a 1031 exchange allows you to defer capital gains tax by reinvesting the proceeds into a similar type of property:

What Are The Rules And Regulations For a 1031 Exchange?

A 1031 exchange, a like-kind exchange, is a tax deferment strategy that allows investors to swap one investment property for another and defer capital gains taxes. 

Here are the rules and regulations of a 1031 exchange:

Imaginative Ways To Use A 1031 Exchange

There are more imaginative ways to use a 1031 exchange than a traditional one.

Reverse 1031 exchanges, Reverse Improvement Exchanges, and Reverse Construction Exchanges are all viable options that can help you maximize your gains while minimizing your taxes.

Reverse 1031 Exchange

A Reverse 1031 Exchange is a tax deferment strategy that allows real estate investors to trade one investment property for another without incurring capital gains. 

Here are important points to consider when looking into a Reverse 1031 Exchange:

Reverse Improvement Exchange

A reverse improvement exchange is an advanced exchange that allows taxpayers to acquire their intended replacement property before selling their current property.

It combines a reverse 1031 exchange and an improvement 1031 exchange. 

Here are some key points about this type of exchange:

Reverse Construction Exchange

A reverse construction exchange is a combined strategy that allows an investor to acquire their replacement property first and improve it before selling the relinquished property. 

It involves the following steps:

Key Takeaways

A 1031 exchange is an excellent tool for real estate investors to defer capital gains tax and free up more capital for investment in the replacement property. It's essential to remember that exchanges must be appropriately structured and adhere to all IRS rules, but when done correctly, they can provide significant tax savings.

For those looking to learn more about 1031 exchanges, Royal Investing Group Mentoring offers resources and guidance on how to take advantage of this powerful tool. Join us and start taking control of your financial future!

Solo 401k: The Biggest Tax-Saver

A Solo 401k is the biggest tax-saver for real estate investors. No one likes to pay taxes, but like death–they’re inescapable.

We can’t help you escape death (we can help you plan for it), but we can help you minimize some of the onerous tax burdens you may incur due to your earned income. 

Watch Pete Schindele, CFO and CPA of Royal Legal Solutions, discuss why investors love the Solo 401K in his Royal Investing Virtual Summit presentation, Solo 401k: The Biggest Tax Saver.

In this article, we’ll discuss the features of the Solo 401K, who needs it, why the Solo 401K is the biggest tax-saver, and how to use a Solo 401k to build wealth. 

Solo 401k: Features, Myths, and Benefits

What is a Solo 401k? It’s an individual 401k that primarily benefits a business owner with no employees. 

The IRS disallows you from contributing to a Solo 401k if you have any full-time employees in your business. But you can use the plan for both you and your spouse. 

Features of a Solo 401k

Here are the basic features of the retirement plan: 

Myths Surrounding Solo 401k Plans

Myth: I can’t have more than a retirement account.

Truth: You can have more than one; it’s legal, and you act as the fiduciary. 

Myth: I’m too young to think about retirement.

Truth: You’re never too young to invest in retirement and get returns on any amount you set away in your Solo 401k.

Myth: I don’t have enough money to plan for retirement.

Truth: Some money is always better than no money in your retirement account; if you fail to plan, then you are planning to fail–especially in retirement.

Benefits of Solo 401k

Who Can Use A Solo 401k As Their Biggest Tax-Saver?

That depends on where you are on your journey. However, a Solo 401k is a powerful tool for real estate investors. As such, real estate investors need a Solo 401k because it enhances their real estate investment returns.

The Solo 401k is an integral part of the bigger picture regarding securing your financial future. It’s part of a comprehensive ecosystem geared to generate wealth and provide asset protection so you can: 

How To Purchase Property With A Solo 401k

Purchasing property with a Solo 401k makes this retirement plan a powerful tool for real estate investors. 

  1. Open A Solo 401k: You create a Solo 401k with an EIN and signed plan documents.
  2. Fund The Solo 401k: Fund it in various ways by:
    1. Making annual contributions
    2. Transfer from qualified plans
    3. Rollovers from Traditional IRAs, SEP IRAs, SIMPLE IRAs
  3. Determine Purchasing Method For Property: You have four options using a Solo 401k to invest in physical real estate. Each method has specific guidelines and rules:
    1. Cash purchase
    2. Debt financing: Get a nonrecourse loan to purchase a property
    3. LLC: Solo 401k housed within an LLC 
    4. Tenancy In Common (TIC): With a partner
  4. Put Your Offer Together: Your Solo 401k makes the offer on the property. You (the trustee) sign for the plan, and the earnest money deposit comes from the Solo 401k. 
  5. Close On Property: When you close, you (the trustee) approve and sign the property purchase documents and submit them to the closing agent. The Solo 401k wires or cuts a check for final funding. 

Managing Real Estate Bought With A Solo 401k

Once you buy a property with the Solo 401k, the plan manages the property. That means that the Solo 401k pays the bills, including: 

Never mix personal funds with Solo 401k funds; otherwise, you may trigger a massive tax event.

What about rent?

You must deposit rent checks directly into the Solo 401k account. In addition, you cannot use the rental income personally. If you withdraw the funds for personal use, it becomes a taxable distribution. 

Key Takeaways On The Biggest Tax-Saver

A Solo 401k is the biggest tax-saver for real estate investors. It allows you to control your money and offers excellent tax benefits. 

Moreover, a Solo 401k is especially beneficial when you use it to purchase real estate as it gives you unique benefits and tax-sheltered income. All in all, a Solo 401k is a robust retirement plan that generates wealth. 

Do you still have questions about how you can leverage a Solo 401k in your real estate investing journey?

Join us for our weekly Royal Investing Group Mentoring so our expert contributors can answer all your questions, dish out additional information, and provide best practices to help you succeed. 

Connecting Private Lenders With Borrowers

Investing in real estate can be challenging. It's a harsh industry, especially when it comes to securing capital. Connecting private lenders with borrowers may be a solution for real estate investors. 

Private lenders aren't for everyone. But, in certain circumstances, they may be right for you. Chris Naugle, Founder and Owner of The Private Money Club, explains in a Royal Investing Virtual Summit how his company and other private money lenders connect with borrowers and provide them the capital and solutions they need. 

What Are Private Lenders?

Private money loans, more commonly known as private money, are loans offered by a private organization or even a wealthy individual to another person or company. These individuals and organizations providing such financial help are called private money lenders.

Private lenders allow you to secure funds outside traditional banking or lending qualifications. However, due to relaxed regulations, these loans can be risky for both parties, so due diligence is required. 

Who Can Be A Private Lender?

Since a private lender is anyone who has money to give you that isn't a bank, a private lender can be any of the following: 

If you're looking to buy a property, attend to much-needed renovations, or prep a home for reselling- private lenders might be the perfect fit.

How Do Private Lenders Evaluate Borrowers?

Guaranteeing a solid return on investment is of the utmost importance - and that means mitigating any risk involved. Before providing capital to potential borrowers, they analyze various factors such as:

A Borrower's Choice: Private Lenders vs. Banks

Why would you choose a private lender over a bank? 

Banks and credit unions typically don't lend to rehab projects or other investments for flippers - the property must be in good standing to receive conventional financing. That might kill a lot of deals for you. Private lenders are usually more than willing to fund these activities.

Advantages

In most cases, private lenders have lower borrower requirements than a bank. For instance, you may enjoy the following:

There are also some drawbacks when you work with a private lender that you should know. 

Disadvantages

With a traditional lender, you can secure a 30-year mortgage. Private lenders are flexible but usually want their money back sooner than 30 years. 

Another issue is that you may have to pay a higher interest rate than what you'd find at a bank.  

Before taking out a loan, it is essential to vet the source of funds and ensure that those funds are legitimate. Typically, these lenders comprise several individual investors who expect a return on their investment; thus, verifying that your loan won't abruptly collapse is critical for borrowers.

How Do Borrowers Connect With Private Lenders?

Understanding the kind of private lender you seek is integral to beginning your search. Finding the right person may be time-consuming. But don't worry - there are a few approaches out there that can help you connect with a private lender. 

Use your network

Establishing connections through networking is a reliable method for locating private lenders. Use it to find accredited investors, individuals, and financial institutions who can provide your funds.

Look for places you can grow your network:

If you're open to seeking out private individuals, your search options become almost infinite.

Google private lenders

If you're searching for private lenders near you, it's as easy as Googling them. Additionally, dedicated sites such as Private Lender Link can help to locate the right lender for your needs quickly.

Keep in mind, however, that lenders obtained through these searches will most likely receive more offers than lenders found organically. 

What If I Want To Be A Private Lender?

Private lending may be a solid strategy if you're interested in earning passive income. As opposed to investing directly in real estate or business ventures, which require purchasing property and managing the day-to-day operations of a company, private lending allows you to reap the rewards without any of these hassles.

You'll need the required capital to become the bank for borrowers to turn active income into passive income.

Key Takeaways

Connecting private lenders with buyers is a people business. As a real estate investor, you must massage your network to find a private lender. You'll see distinct advantages of working with a private money lender. 

Some of those include: 

There are drawbacks, so you must do due diligence when looking for a private lender. 

Do you want to know more about connecting with private lenders or learn how you can become a private lender? Sign up for our FREE Royal Investing Group Mentoring, where we cover all types of real estate investing topics. 

Digital Marketing Tools for REIs

The internet has revolutionized business, especially for real estate investors. Web presence, SEO, and Google Ads are handy and powerful digital marketing tools that you must use to stay relevant in an increasingly competitive field. 

Dr. Adam Gower builds best-in-class digital marketing platforms for real estate developers interested in online syndicated deals. He stopped by and shared his expertise on generating leads through your web presence, optimizing your homepage, and how SEO and Google Ads can generate business. 

What Is Online Real Estate Syndication?

Online real estate syndication is a process of pooling money from individual investors to purchase and manage income-producing real estate. Private investors can participate in the deal by buying shares in the entity that owns the property, typically organized as a limited liability company (LLC) or limited partnership. The entity will manage the investment, collect rent, pay expenses, and distribute profits to the investors based on their ownership percentage.

The syndication structure allows real estate owners to raise capital from multiple sources without giving up complete property control. It also allows individual investors to diversify their portfolios by investing in professionally managed real estate assets with high potential returns.

Why Does Digital Marketing Matter To Real Estate Investors? 

Digital marketing starts with your online presence. Crafting a professional online presence through your website presents more than just an opportunity to publicize your brand and gain trustworthiness. It also gives potential investors easy access to discover what you offer - all from the comfort of their homes.

A marketing funnel is a visual representation of the customer journey, from first contact with you all the way through to purchase. It comprises distinct stages, each representing a step in the process. You can use different tactics and strategies at each stage in the funnel to draw customers further down until they reach the conversion.

Quality content that addresses a customer’s pain points can effectively draw customers through the funnel. Content should not just focus on selling but on educating and providing solutions to your potential investors. High-quality, informative content will draw people in and eventually lead them to become investors.

How Does SEO Impact A Real Estate Investor?

SEO stands for Search Engine Optimization, which is optimizing a website to increase its visibility and traffic from search engines. 

By using a combination of on-page and off-page optimization techniques, such as: 

Keyword Research

Keyword research is the process of finding and analyzing keywords that are relevant to your business or industry. 

This process involves conducting keyword searches using tools such as Google Adwords, Keyword Planner, and other keyword analysis tools to identify popular search terms related to your business.

Link Building

Link building is acquiring links from other websites to your website. The links help search engines understand that your website is reputable and authoritative in its industry, resulting in higher rankings on search engine result pages.

Build links through:

Content Optimization

Content optimization is the process of optimizing existing content for search engines. Optimizing ensures that content has relevant keywords, is well-structured, and is optimized for search engine crawlers and readers. 

Content optimization also ensures the website is easy to navigate and provides a good user experience. Additionally, you should regularly update content with new and relevant information to keep readers engaged and boost visibility. 

SEO helps websites rank higher in search results. This increased visibility brings more potential customers to the website, increasing revenue.

Real estate investors can benefit from SEO by improving their visibility in search engine results and reaching more potential customers. 

Real estate investors can increase their website traffic and target specific audiences by optimizing their websites for relevant keywords related to their industry. Link-building and content marketing strategies can also help real estate investors build authority among potential partners. 

Why Are Google Ads Important To Digital Marketing?

Google Ads is a paid advertising platform that enables businesses to create and display product or service ads on search engine result pages. With Google Ads, companies can have their ad appear at the top of search results when customers search for relevant keywords, allowing them to reach more potential customers. The ads are an effective way to drive more traffic and leads to your website. 

Google Ads is an essential tool for real estate investors because it allows them to reach a wider audience and drive more qualified leads. 

With Google Ads, investors can target potential buyers with relevant keywords, allowing them to capture the attention of motivated partners likely to convert. 

Digital Marketing Key Takeaways

The internet has revolutionized how real estate investors reach potential buyers, tenants, and sellers. It has changed the game by:

Web presence, SEO best practices, and using Google Ads are potent weapons in your marketing arsenal. The people leveraging those tools are the most effective in an ever-changing real estate investing landscape. 

Do you want to learn more about best practices for real estate investors? Yes! Join our Royal Investing Group Mentoring to unlock the secrets to success from real estate investors like yourself.

Getting the Right Insurance

As a real estate investor, getting the right insurance is among the most important things you can do to protect yourself, your family, and your business. Getting the right insurance means buying the right mix of policies and protections. 

Join Aaron Porter, Royal Insurance Manager, as he discusses how a specialized agent helps provide holistic protection for your family, business, and legacy in "Getting the Right Insurance."

This article discusses the best practices for finding and buying the right mix of insurance to protect your family and assets.

What's Important About Getting The Right Insurance?

Getting the right insurance is essential, even if the upfront cost seems expensive. Moreover, you can't put a price on the peace of mind, emotional well-being, and financial freedom protection that insurance provides. 

Royal Insurance enables you to save time and money by proactively seeking the correct coverage for your needs, including the following: 

Getting The Right Insurance: Homeowner And Auto Insurance  

Getting the proper homeowner and auto insurance is critical because it reduces the money you have to pay out of pocket if the worst happens. The cheapest policy is rarely the best and may leave you holding the bag in the event of an accident. 

You need to determine the amount of coverage by identifying the following: 

When selecting a provider, it's better to work with a single, nationwide agent with access to many carriers with superior customer service and claims payouts. Every year, you and your insurance agent should go over your specific circumstances to adjust your coverage level. 

Getting The Right Insurance: Rental Property And Casualty Insurance

Getting the right insurance for your rental properties includes discussing the following with your real estate agent: 

In most cases, the type of policy you'll want to get is a Landlord/Dwelling DP-3 policy. Most DP-3 policies cover the following: 

When you get the policy, your name will go on the policy; then, your agent will add your Land Trust and your operating LLC as additional insured on the property. 

Other people to include in the policy are the following: 

For personal liability, you must have the required minimum for an umbrella policy to activate in the case of a claim. 

Getting The Right Insurance: Umbrella Policies

An umbrella policy is additional insurance that provides more protection beyond your existing insurance's protections. Getting the right umbrella insurance enables you to leverage the policy as a cost-effective supplement and amplify your underlying insurance. 

The general rule to determine the coverage you need for umbrella insurance is that it should equal your net worth. 

When determining the amount of insurance you need, identify your replacement cost. That is the cost of your initial investment and appreciation. 

Why would you voluntarily pay more? The insurance company will be less likely to claim a lower payout based on depreciation. 

They'll be more inclined to:

Getting The Right Insurance: Business

There are many factors in getting the right insurance for your business. Your agent and carrier need to know how your company operates and how you plan to grow to have insurance tailored to your specific needs. 

As your business grows and adapts to change, you need business insurance that evolves and adapts to your needs. To make sure you get the most out of your business insurance, you should: 

Getting The Right Insurance: Life

You have the option to get term or whole life insurance. Getting the right insurance depends on your financial circumstances and the protection you need.

Term Life Insurance

Term life insurance is a type of life insurance that covers a specific time, like 30 years from the start date. The best term life insurance has the following minimum coverages:

Your age and health are the two most impactful cost factors for term life insurance. 

Whole Life Insurance 

Whole life insurance provides a death benefit, accumulates a cash value, and covers the insured's entire life. You can customize the policy's parameters, including the following: 

Getting The Right Insurance: Key Person Insurance

Key person insurance protects your business operations. A key person or key man policy creates a funding mechanism resulting from an insured person dying or becoming disabled.

If the insured dies or becomes disabled: 

You'll need to review the coverage required for each key person periodically. 

Key Takeaways

Insurance is crucial for protecting your family, real estate, and business. To fully protect yourself, getting the precise mix of coverage and policies is imperative. 

Learn more about the right mix of strategies for you as a real estate investor in Royal Investing Group Mentoring. We'll discuss the finer points of asset protection, tax savings, estate planning, and investment opportunities that will support your investing goals.

Best Practices Structuring Entities With Partners

The first thing you need to consider for your business is choosing a structure. Jason Marino, Esq., staff attorney with Royal Legal Solutions, offers his expertise on best practices when structuring entities with partners.

This decision should be made among you and your partner(s) and will impact your business in the future.

You’re looking for low-cost and efficient structures as a real estate investor. According to Marino, the structures that meet those criteria include:

You can use other structures, but these are ideal for real property. In this article, we’ll discuss the ins and outs of each of the structures and how they affect you as a real estate investor. 

Structuring Entity: Joint Venture

What is a joint venture? When you structure your business entity with partners using a joint venture, you enter into a formal contractual agreement.

Benefits Of Structuring Your Partnership As A Joint Venture

A joint venture is less formal, and the contract is usually brief. Here are some of the benefits:

Your joint venture provides asset protection if done correctly with proper infrastructure (LLC, DST). 

Disadvantages Of A Joint Venture Structure

Like any entity structure with partners, a joint venture has some disadvantages, which we will cover here: 

Structuring Entity: Limited Liability Company (LLC)

An LLC can have complex partnership clauses in its operating agreements. Ideally, they’ll have partnership clauses built into them. 

Benefits Of Structuring Your Partnership As An LLC

An LLC provides more control and durability than a joint venture. Here are some additional benefits of an LLC:

Disadvantages Of An LLC Structure

An LLC is more complex and requires you to register with the secretary of state and requires additional actions for proper upkeep. For instance, you have: 

Although there is added cost and maintenance with an LLC, it provides much more protection than a joint venture agreement. 

Structuring Entity: Land Trusts With Series LLCs

A Land Trust with a Series LLC is related to the traditional LLC we discussed above, but it has some additional benefits for real estate investors. 

The primary benefit is the flexibility in adding partners at various levels:

Advantages Of Structuring As A Land Trust With Series LLC

Similar to a traditional LLC, a Land Trust With Series LLC gives you more control. Some additional benefits include the following: 

Disadvantages Of A Land Trust And Series LLC Structure

A Land Trust and Series LLC are formal agreements. That means there will be additional regulatory requirements and costs for maintenance. 

I’ve Chosen A Structuring Entity With My Partner; Now What?

You’ll need to choose clauses. There are some universal clauses, but many will be unique to your situation, goals, and plans. 

Choosing Clauses For Your Structuring Entity

There are three broad categories of clauses you need to be familiar with regardless of the structure your choose: 

Timing Clauses

Timing clauses avoid confusion and avoid disputes between partners. The clauses determine the following: 

Ownership And Responsibilities 

The ownership and responsibility clause defines the expectation of each partner. The clauses determine:

Dispute Clauses

Dispute clauses provide the mechanism or agreement for resolving disputes. The clause control: 

Key Takeaways

The best practice for structuring entities with partners depends on your specific situation, future goals, and open communication. 

In general, as a real estate investor, you can structure your business using the following: 

After determining your entity structure, you must hammer out the clauses. Your specific circumstances dictate which clauses you will need. 

Do you have questions about structuring your entity with a partner? We have answers! Join Royal Investing Group Mentoring to link up with our subject matter experts. They will happily teach you more best practices for structuring your business and answer other burning questions. 

Buying Real Estate Notes To Build Wealth

Are you a real estate investor who likes the idea of building wealth? Buying real estate notes might be right for you. 

We invited Paige Panzarello, CEO of Cashflow Chick, to share her expertise about building wealth with notes when inventory is low, and property prices are too high for any good deals. 

Panzarello draws on her 20 years of experience and $150 million in real estate transactions completed to explain the fundamentals of buying real estate notes and how they generate profit. 

Keep reading to learn more about building wealth by buying real estate notes. 

What Does Buying Real Estate Notes Mean?

To understand what buying real estate notes means, you need to understand what a note is. 

What Are Notes? 

Notes are a promise to pay or a debt instrument. The note's debt can be secured or unsecured: 

Also, notes can either be performing or non-performing:

Advantages

An advantage of buying real estate notes is that you become the bank. 

Another advantage is that by not buying hands-off investing--you're not a landlord. Instead, you own the promise to pay, not the property.

What Types Of Notes Should I Buy?

The type of note you buy will depend on your risk tolerance and investing strategy. But, Panzarello prefers to invest in non-performing real estate notes. 

Why Non-Performing Notes? 

Non-performing notes provide good value for a real estate investor. When you buy a non-performing note: 

How Do You Find Deals Buying Real Estate Notes? 

Building a network is the best way to find deals for buying real estate notes. 

Through your network, you may find deals buying real estate notes from the following: 

How Do You Make Money Buying Real Estate Notes?

How do you make money buying real estate notes? Usually, you'll buy the non-performing note at a discount on the unpaid principal balance. 

The following example uses figures for educational and illustrative purposes only. The figures are not a guarantee of performance. 

Here is an example of how you might make money buying real estate notes: 

Since it's non-performing and the person who has the note is not paying anymore, you can buy the note at a discount. 

In this instance, let's suppose that the discounted note price is 50% of the current market value of the property: 

 You are all in for $45,000 but have equity of $35,000. The equity is the home's current market value minus the cost of buying the note: $80,000 CMV - $45,000 note = $35,000.

But how do you tap into that equity? 

The way to make money buying real estate notes is through one of the many flexible exit strategies. 

4 Money-Making Exit Strategies For buying real estate notes

Foreclosure 

When you invest in notes, you need to be aware of the difference between judicial and nonjudicial foreclosure states.

In general, you want to avoid judicial foreclosure states because they take more time and money to foreclose. 

Foreclosure is usually the last resort, but since you're in the first position: 

Here is an example of how foreclosure may work out. 

Short Sale

A short sale usually takes 3-6 months. An example of a short sale looks like this: 

Deed In Lieu Of Foreclosure

This exit strategy generally lasts 3-6 months. You get the property instead of foreclosing, which acts as complete repayment of the loans. 

Once you have taken possession of the house, you can:

Establish Reperforming Loans

Getting the loan reperforming can take between 6-12 months. You can use $120,000 to work with borrowers to get them reperforming on loan by forgiving some debt to get them performing. It makes sense because you were never going to see that money anyway. 

You might give the borrower a $20,000 discount: 

You make money by:

Or, when they become performing notes, you can sell them to a performing note investor. 

Key Takeaways

As with all deals, buying real estate notes requires you to perform due diligence. 

The fundamentals of buying real estate notes include the following: 

Do you want to learn more about real estate investing? Join Royal Investing Group Mentoring, where our expert investor community discusses opportunities and real estate investing best practices.

Why Residential Assisted Living Investing May Be Profitable For You

People age. And as those people age, they will need a place to call home. Our aging population’s demand for homes may make residential assisted living investing an attractive addition to your portfolio.

As Isabelle Guarino-Smith, COO of Residential Living Academy, notes, 76 million Baby Boomers are entering the marketplace for assisted living. As a result of the Boomers' entrance into the market, Guarino-Smith argues that now is an ideal time to invest in residential assisted living.

The world is in flux, but the more things change, the more they stay the same. 

People will still get old and still need a place to stay. Consider this, the fastest growing demographic is people aged 80 and older. We have better medicine, technology, and healthcare. And it's making people live longer.

Those longer-living people may need some help with their day-to-day life or medical attention to preserve their quality of life. Our aging mothers and fathers still need a safe place to call home. 

In this article, we'll discuss the following: 

Residential Assisted Living Investing: Marketplace Truths

A residential assisted living is a group home that helps with the activities of daily living for the seniors who live there. 

It's not:

Instead, a RAL is a residential home in a single-family home residential neighborhood. Typically, an owner or operator renovates these homes with age-appropriate furniture and furnishings, especially the rooms and bathrooms. 

Common Myths and Misconceptions

Ways For You To Get Involved In Residential Assisted Living Investing

There are three primary ways you can get involved in residential assisted living investing.

#1 Own The Real Estate And Lease To An Operator

You would be known as a preferred real estate provider. You would need to purchase a home, renovate it, and get it licensed and ready for the operator. 

Some advantages of going this route include the following: 

#2 Own The Real Estate And Be The Operator

You work in the home and operate the business. Being an owner-operator means you'll help each senior with their day-to-day activities, including but not limited to: 

You can save money by doing this, but you will invest a lot of sweat equity. 

#3 Private Lending Or Partner

As a private lender, you provide the capital for an interested borrower who wants to operate a residential assisted living facility. Private lending is the most hands-off approach to breaking into the RAL market. 

Residential Assisted Living Investig: Model ROI

For these education examples, we will use an assisted living facility's average monthly cost of $4,500. For illustrative purposes, we'll use ten residents, which is typically the maximum number of residents that you can house:

________

For a more detailed breakdown of how much money you have the potential to make, check out Isabelle Gaurino-Smith's in-depth discussion of different earnings models.

Key Takeaways

There is a silver tsunami upon us composed of aging Baby Boomers. More than 76 million boomers are aging and are looking for places to live that are conducive to their lifestyle. 

One possible place that boomers will call home is residential assisted living (RAL) homes. 

RAL properties have several advantages that may make you want to include them in your investment strategy: 

The demand appears to remain strong as people live longer, so now may be an opportune time to invest in the emerging RAL marketplace. 

Do you have questions about how to get started in residential assisted living investing or real estate investing in general? 

Join our FREE Royal Investing Group Mentoring, where we meet weekly to discuss the nuances, challenges, and solutions involved with your real estate investments. 

Series LLC Updates 2023

The Texas Legislature passed new laws regarding Texas series LLCs. The law went into effect on June 1, 2022. 

Ostensibly, the law provides additional protection for individuals, businesses, and other entities conducting business under the protection of a series LLC. In addition, the statute (Tex. Bus. Org. Code § 101.601 Subchapter M) characterizes a series LLC as being "protected" or "registered." 

In this article, we'll go over how the law defines the different characterizations of LLCs and the ramifications that this law may have on you as a real estate investor.

What Is An Ordinary LLC?

A series LLC created before the law took effect (June 1, 2022) will be called an ordinary series LLC.

This type of LLC is virtually indistinguishable from a "protected" series LLC. In other words, the law will treat an "ordinary" LLC the same way it would treat a "protected LLC."

What Is A Protected LLC? 

A protected LLC is a series LLC created after June 1, 2022. The term "protected" did not exist in any laws before June 1, 2022, so any LLC created before that date is called "ordinary." 

Both "ordinary" and "protected" series LLCs enjoy equal rights and legal protections. The only difference is in what they are named. 

What Do I Need To Do For My Series LLC? 

As long as you want to keep your "ordinary" (or "protected" if created after June 1, 2022) LLC, you don't need to do anything. If you want to create another "protected" LLC, the process has not changed. 

What Is A Registered LLC?

A "registered" LLC is a new series LLC introduced by the statute that took effect on June 1, 2022. Delaware's registered series LLC provides the model for Texas' registered LLC. 

78-a defines a "registered" series LLC as a "series of domestic limited liability company that is formed as a registered series in accordance with Section 101.602."

The critical difference between an "ordinary" or "protected" series LLC and a "registered" series LLC is that the "registered" LLC must be publicly filed and registered with the Texas Secretary of State. 

A registered series is an option, not a legal requirement. 

How Do I Create A Registered LLC?

To create a "registered" series LLC, you must file a certification of registered series with the Texas Secretary of State. 

The state has the following fees: 

For the certification of registered series, each costs $300 to file. The fee is in addition to the original $300 fee you must pay to create a general series LLC. 

For example, suppose you create a series LLC and want to have one of the entities in the series registered. That would cost $600.

Any subsequent registered LLCs would cost an additional $300. 

Naming Requirements For a Registered LLC

The registered LLC must contain the following: 

Are There Advantages To Having A Registered LLC?

You must publicly file a registered series. The public filing requirement may give banks, lenders, and title companies peace of mind regarding your LLC's proper and legal formation. 

It may become the case that entities involved in real estate transactions prefer a registered series LLC because they can be sure that a registered series LLC is legal.

What Options Do I Have For My Series LLC?

If you have an existing "ordinary" or "protected" LLC, you have the following options: 

Currently, the statute's effect is in flux because of the newness of the situation in Texas. What may occur in the future is that entities such as banks, lenders, and title companies will only conduct business with a registered LLC. 

The forms for converting or merging an ordinary, protected, or registered LLC are available online with the Texas Secretary of State.

Key Takeaways

Since June 1, 2022, Texas law has included a provision that differentiates between "ordinary," "protected," and "registered" series LLCs:

It is not apparent exactly how the new law will play out, and you have the following options: 

The attorneys at Royal Legal Solutions are here to help you understand the power Texas Series LLCs can bring to your business. If you would like to achieve bullet-proof asset protection, take our quiz. Then, you’ll have to opportunity to schedule a meeting with an advisor to discover if this is a strategy you would benefit from.

Deal Vetting for Real Estate Investors

Deal vetting in real estate is essential to any potential investor's due diligence. The process ensures that the investment decision follows sound economic principles and an understanding of its risks. 

It can also help uncover hidden issues or opportunities to negotiate better terms.

By taking time to vet a real estate deal carefully, investors can make sure they make informed choices to protect their financial interests. It also helps to ensure that any purchase aligns with their long-term objectives.

What Is Deal Vetting?

The process of vetting a real estate deal involves an in-depth analysis of the property, its current condition, and any potential red flags. 

This due diligence includes assessing factors such as:

It also involves researching the seller's history and scrutinizing financial statements to ensure everything is accurate.

Ultimately, the goal of vetting a real estate deal is to identify potential risks or opportunities associated with the purchase. By doing so, investors can ensure they get the best possible deal and avoid surprises down the road.

Importance Of Knowing the Local Market

When vetting a real estate deal, it is essential to understand the local market. Deal vetting includes researching the area's economic trends and demographic makeup to understand the potential future value. 

Additionally, understanding the nuances of local zoning laws and regulations can give insight into what kinds of projects are allowed in the area.

Significance Of An Area's Economic Trends

Researching an area's economic trends involves looking at factors such as:

You can find this information in government reports or other published resources. It is important to note that trends tend to move in cycles, so it is important to analyze potential future value over a more extended period.

By researching an area's economic trends, investors can better understand the potential future value and compare it to the asking price. This due diligence helps ensure the deal is reasonable and worth pursuing.

How Do I Recognize A Good Deal?

The vetting process can help identify a good deal. As previously mentioned, due diligence should include researching the area and analyzing potential future value.

It is also important to thoroughly inspect the property for signs of structural damage or other issues that could affect its value. Additionally, investors should review contracts closely and negotiate better terms.

Deal Analysis

It is also essential to consider the cost-benefit of a real estate deal. This means looking at the potential return on investment (ROI) and weighing it against the risks involved. 

Factors such as market volatility, tenant turnover, legal fees, and property maintenance can all affect an ROI.

Deal Vetting Key Takeaways

Real estate investing carries risk different from other investments, so extra care is needed.

The importance of due diligence in real estate investing, specifically rental properties, should not be underestimated. The objective is to have a positive cash flow each month and own a property that will rise in value over time.

One unfortunate decision or mismanaged rental property could cost you instead of contributing to your wealth. By doing proper research upfront, you increase the chances of achieving your goals significantly.

If you want help vetting a real estate deal, join Royal Investing for free group mentoring. Our experienced team can provide invaluable advice and guidance to help you make the best investment decision.

Investment Strategies on How to Save Money on Taxes

Taxes are one part of real estate investment operational costs. Although they shouldn't drive your investment decision, you need to thoughtfully evaluate your preferred asset classes and accounts to lower your tax bill. Read on to discover helpful investment strategies to save money on taxes.

Scott Royal Smith speaks on investment strategies to help you save tax funds

While tax rates and rules might change over time, nothing beats the value you'll get from factoring in taxes while making investment decisions. 

Taxes can reduce your return on investment yearly, potentially affecting your long-term goals. Before deciding on whether to go for real estate investment, cash instruments, bonds, or stock, it's best to understand how the Internal Revenue Service (IRS) treats income from such asset classes. 

You can also gain valuable insights from investment experts like Scott Royal Smith by listening to this Icons of Real Estate Podcast episode, where he gives out vital tips for lowering investment property tax returns. 

Scott Royal Smith is an astute real estate investor and founder of The Royal Legal Solutions, where he offers asset protection services to real estate investors. 

If you're an investor looking to protect yourself against paying high taxes on your investment return, this article explores vital investment strategies you can adopt. Read to the end!

How the IRS Tax Your Investments

The IRS taxes investment income separately from the way working wages are taxed. These differences include the tax rates and how and when investment income taxes are assessed. 

Broadly speaking, investment income comes in the following two ways, with each treated differently for tax purposes.

Capital Gains

Refer to the increment in an asset price. For instance, if a real estate property or stock goes up in value, the extra amount is the capital gain. 

The government taxes capital gains when the asset has been sold. 

Cash Income or Dividends

Cash income or dividends is money you receive during the year. This cash is often subject to taxes for the year it was received. 

Taxation is a crucial factor to consider before choosing an investment strategy
Image by Steve Buissinne from Pixabay

7 Investment Strategies for Lowering Taxes

Now that you know how the IRS taxes investment income, the following are investment strategies you can adopt to lower your taxes:

#1 Opt for Long-term Capital Gains

Investment is a crucial wealth-generation tool, with the investor benefiting from favorable tax treatments for long-term capital gains. 

If you hold a capital asset for longer than a year, you'll enjoy a preferential tax rate depending on your income level. It could be 0%, 15%, or even 20% of the capital gain. 

Alternatively, the IRS will tax your capital gain at ordinary income rates if you hold the asset for less than a year before disposing of it. Therefore, it's best to understand short-term vs. long-term capital gains before starting your investment journey. 

#2 Max Out Retirement Accounts

Employees can enjoy reduced taxes from contributions up to $19,500 in a 403(b) plan and $20,500 in a 401(k) plan. Also, workers up to 50 years and more can add $6,500 to their retirement plan contribution. 

Alternatively, employees without a workplace retirement plan can contribute up to $6,000 or $7,000 for people above 50 in their traditional individual retirement account (IRA) and enjoy a tax break. 

Taxpayers with workplace retirement plans can deduct all of their traditional IRA contributions, depending on their income. 

Check the IRS rules for how much to deduct and if you're qualified for such deductions. 

The right investment strategies can save an investor from double taxation
Image by Nattanan Kanchanaprat from Pixabay

#3 Utilize a Health Savings Account

Consider using your health savings account to reduce taxes if you have a high-deductible health insurance plan. If you're lucky, your employer might match your health savings account (HSA) as with a 401(k). 

This contribution by payroll deduction is exempted from your taxable income and is completely tax-deductible from your income. Presently, the maximum deductible contribution for individuals is $3,650, while for families, it's $7,300. 

These funds can grow without you paying taxes on the earnings. Your withdrawals won't be taxed if you use your HSA to pay some medical expenses. 

#4 Lower Long-term Capital Gains Rates

The IRS fixes the wage and investment income differently, as reflected in the IRS capital gains treatment. Depending on your income level, the IRS taxes capital gains at 20%, 15%, and even 0%. However, you have to play by the rules. 

These taxes are often lower than short-term capital gains, taxed at the ordinary income rate. If you're a buy-and-hold investor and hold your investment for over a year, you can take advantage of lower long-term rates. 

For instance, if you earn less than $80,800 as a couple or $40,400 as an individual filer, you can be exempted from qualified dividends or capital gains up to a specific threshold. 

If you gain too much ordinary income, you'll be ineligible to qualify for the 0% rate and have to pay a higher investment tax. 

More so, if your income is less than average in a tax year, you can gain a 0% investment tax rate and increase your investment cost without any tax hit. 

#5 Employ Tax Loss Harvesting

Entails using your investment losses to offset the gains yearly, helping to reduce your income tax liability at the federal level. 

If your investment losses are more than the gain, you can use tax loss harvesting to offset about $3,000 of the annual federal taxable income. You can also carry additional losses over to future tax years. 

Tax loss harvesting can be valuable for high-earning investors with a long-term higher capital gain tax and a potential 3.8% additional net income tax. Note that if you hold off selling your asset till later in the year, the prices will depend on the year's final weeks of market downturns. 

Identical stocks bought within 30 days after or before the sale will also be regarded as a wash sale, which may render it ineligible for tax loss harvesting for that tax year. 

Consider consulting a tax advisor to understand how the wash sale rules work and if it prevents you from using the tax loss harvesting strategy. 

The right investment strategy can help you lower taxes on real estate investments
Image by Gerd Altmann from Pixabay

#6 Use a 1031 Exchange

Real estate investors looking to sell a property that isn't their primary residence can take advantage of the 1031 exchange and reinvest the money into another building. 

1031 works by allowing you to sell your property, defer your capital gains, and invest the money into another like-kind investment property quickly. However, 1031 exchanges come with specific rules.

These rules can be complex, but you must follow them strictly to avoid losing your tax deferral. Like other asset types, you can hold your investment long-term and defer capital gains for up to decades. 

Most importantly, you get to avoid high real estate commissions. 

#7 Consider Asset Allocation

Generally, cash distributions and dividends are taxable in the year they're received. Therefore, if you use a taxable account, you can't avoid paying taxes as with capital gains. 

Getting low dividend taxes depends on where you keep your assets. For instance, you can opt for a tax-advantaged account, like a standard taxable brokerage account or an IRA. 

For investors with dividend stock, it's best to keep them within the tax-free confines of an IRA to avoid taxes on the distributions. Alternatively, you can hold stocks with possible capital gains in a regular taxable account. 

You can enjoy IRA's key benefits (tax deferral) in a taxable account until you're ready to sell your investment. However, consider whether packing your whole dividend payers into the IRA is the best financial decision.

Final Words 

Although paying taxes to the authorities is crucial, you don't have to pay more than is necessary. Taking your time to peruse the IRS website and other reputable financial information sites might lead to tax savings up to hundreds or even thousands of dollars.

Don't forget to get resources from successful investors. To gain more insight, you can listen to renowned serial real estate investors like Scott Royal Smith talk about asset protection and how to lower investment taxes on the Icons of Real Estate podcast. 

Whatever investment strategies you adopt, remember the goal is to make tax-efficient decisions. Also, consider how the investments will diversify your portfolio while pursuing your overall investment goals at your preferred risk tolerance level. 

Don't forget to consult a professional tax advisor before making investment decisions to avoid incurring more taxes instead of lowering them. 

However, if the technicalities involved in active real estate investing are too much for you, real estate companies like Holdfolio offer you the chance to become a passive real estate investor and earn returns without doing any work.

This article is sponsored by ArdorSEO, the leading online management company offering local real estate SEO services to help real estate agencies reach more prospective customers online. 

Conclusion

If you're tired of paying more taxes on your investment, you need to learn how to lower investment taxes through seasoned experts like Scott Royal Smith. Catch him speaking about how to reduce investment taxes at the Icons of Real Estate podcast and learn how to become a successful real estate investor like him. 

Key Person Insurance To Protect Your Profits

We'll review how to mitigate the financial loss when a key person dies through a key person insurance policy.  

Preparing for someone's death seems macabre. No one likes to think about the eventual demise that we all face.

As the adage goes, failing to plan is planning to fail. And in the arena of real estate, that saying is incredibly prescient. 

What Is Key Person Insurance? 

Key Person Insurance is something that can be provided for any person inside of your company who holds critical pieces for the company's continued operations. The company is the beneficiary and pays the premiums. 

In a small business, a key person is usually an owner, the founder, or perhaps a critical employee. The main qualifying point is whether the person's absence would cause significant financial harm to the company. If this is the case, key person insurance is worth considering.

How Does It Work?

Under a key person life insurance policy, the business owns the policy, pays the premiums, and is the beneficiary. If a key person dies, the company then collects a death benefit. You or your partners can use that money to help a business replace lost revenue as they search for a replacement.

This type of insurance can be crucial for a business that relies heavily on the health and well-being of a key individual. 

What Are The Benefits?

One of the significant benefits is that should the "key person" become disabled; your insurance coverage can step in and pay up to 100% of the death benefit if needed.

The money can be used as a financial cushion to buy time for the company, sometimes just a small family business, to find a new person to step in, to sell, to shut down, or implement other strategies that can save the company. 

Key person insurance gives your company options other than fire selling or bankruptcy, which happens when you lose the key person.

The coverage for key person insurance can be as low as $100,000 or up into the multi-millions of dollars.

Another aspect of this insurance would be employee retention. 

In the employee's contract, you can state that a percentage of the life insurance policy would go to the family should death or disability happen while employed by your company. These types of term policies can be very inexpensive and have a massive benefit to your company.

Both of these strategies can be instrumental to ensuring that you, your family, and your businesses grow and maintain the financial freedom we are working towards.

What Can Key Person Insurance Protect Against?

Key person insurance protects the company against risk and protects profits and partners. 

Protect profits

The insurance will counteract the lost income from sales or disrupted operations that the key person is involved with. 

The company may use the death benefit to cover the costs of recruiting, hiring, and training a replacement for the deceased. 

Or suppose the company cannot continue to operate. In that case, the insurance allows the business to pay debts, provide cash for investors, cover severance for former employees, and will enable the company to close down without chaos. 

Protect partners

The insurance enables the surviving partner(s) a cash infusion to buy out the key person's stake in the business. Combined with a buy-sell agreement, these two types of protections ensure an orderly continuation of the company. 

How Much Does Key Person Insurance Cost?

The cost depends on how much insurance a company needs. However, this insurance will cost less than bankruptcy if the worst happens to your key person. 

Some factors that you may need to consider when researching include the following: 

The cost also depends on whether you buy a term or a permanent life policy. Typically, term life is cheaper. 

Like any other insurance, the individual's age and overall health will determine the insurance cost.  

Key Takeaways

Key person insurance is a life insurance policy that protects a company in the event of the death of a key executive or other critical individuals. 

Insurance is necessary if an employee's death is detrimental to the company and disrupts the operation of the business. 

The key person for small businesses is typically the owner or founder. The company pays the insurance premiums, is the policy's beneficiary, and will receive the death benefit if the person dies. 

Investing in proper protection is critical to mitigating your company's risk. Otherwise, you'll be in trouble when a key person dies. That means you need reliable insurance specific to your needs as a real estate investor. 

If you want to learn more, check out our article about the challenges faced by real estate investors. It could be the difference between life and death–for your business.

Resourceful Investor's Guide To Structuring a Short-Term Lease

You've decided to get into the short-term rental industry. As a result, you need to know how to structure a short-term lease. 

A whole host of situations and challenges come with this type of property. One of the primary challenges is the level to which your state regulates the industry. There are many laws and regulations that may apply to your city. 

As with any real estate agreement, you want to protect yourself with an enforceable contract containing legally binding terms. Your agreement must encompass the landlord's and tenant's rights and outline essential details concerning the local occupancy laws. 

To help you, we will review the 9 essential items you should include on a short-term lease agreement.

What is a short-term rental?

A short-term rental is an investment property that is rented for a short time. These properties, sometimes called vacation rentals, are an alternative to hotels. They have seen their popularity rise since AirBnB emerged in 2008. 

Owning a short-term rental comes with some distinct benefits, including the following: 

Before Creating A Short-Term Lease, Do Your Research 

First, you must ensure you can have a short-term rental in the property's location.

Local laws

As a real estate investor, you must check local laws and regulations. Laws vary between jurisdictions: in some places, there are no regulations, and in others, short-term rentals are outright banned. 

Protect yourself

Short-term rentals have more tenants shuffling through them. An increase in the number of people coming and going on the property increases your potential liability. 

We've long championed the usefulness of an LLC to shield yourself from liability; without an LLC, you may be liable (sued) for incidents that occur on your short-term rental. And a lawsuit can be costly. 

In addition to an LLC, it's a good idea to work with an attorney to create a short-term rental agreement. A legal professional can advise on safeguarding yourself from potentially problematic tenants who steal from or damage your investment property. 

Screen your tenants 

Screening your tenants is incredibly important. You will run into fewer issues and save time and money if you thoroughly vet your tenants. Make things easier on yourself by having a platform that lets you directly communicate with your tenant. 

After you've done due diligence, you should establish a short-term lease agreement. 

Short-Term Lease Agreement: The Essential Ingredients

As a real estate investor, you may ask yourself, "what should I include in my short-term lease agreement?" The answer depends. Local laws and regulations may stipulate precisely what you have to include, and the rules may apply at the granular level. 

In general, every short-term lease should have the following 9 elements included.

#1. Property details

The first item on a short-term lease should be a clear description of the property. Your description should include every item inside your vacation rental. Also, be direct and to the point, and do not leave any room for misinterpretation or ambiguity. 

#2. Tenant information

Your short-term lease agreement must include relevant information about the tenant. At a minimum, you should have the following: 

#3 Tenancy period

The tenancy period is a critical portion of the lease agreement. The length of the stay starts on the day (down to the hour) that the tenant enters your rental property. The period ends the day (and hour) the tenant departs. 

Suppose you fail to list the tenancy period. In that case, you may run into severe legal issues-like a tenant refusing to vacate the property.

#4 Payment

This potion should include everything that has to do with payment. You will want to include the following: 

#5 Tenant duties

You must define the tenant's obligations in the short-term rental lease. The duties might include maintaining the property and paying the agreed-upon amount at the agreed-upon time. 

#6. Cancellation process

This section explains how the tenant should cancel the rental agreement. Typically, you'll want a written cancellation request from your tenant. 

#7. Amenities 

You can use this section to add more details and information about the property and what you have available. You can include information about AC, TV, and a pool. 

#8. Additional clauses

Consider including additional clauses that limit your tenant's acceptable activities. A standard additional clause is the prohibition of pets from entering the premises. 

#9. Signature 

Your contract is legally binding only if both parties sign it. Consequently, you need to leave room for signatures. 

Key Takeaways About Crafting Your Short-Term Lease

A short-term lease agreement is critically important because it protects you. As a result, you should always remember to have one for yourself and your tenants' safety and protection.

This legally binding contract makes it so that you can enforce the terms of agreements and ensure that your rights are safe. 

Tax Filing with Partners Using an LLC or Series LLC

While having a partner may make business sense, tax filing with partners can be complex and confusing. Paying taxes is painful. It’s tough to part ways with your hard-earned money when you have business expenses and maintenance to handle. 

This article doesn’t include every tax break or loophole available. But it provides helpful, clarifying information about tax filing with partners in an LLC or Series LLC. 

Tax Benefits Of An LLC Or Series LLC

There are several advantages of selecting a series LLC as your business structure. It provides you with asset protection and anonymity, but there are also tax implications. Let’s check out some things you need to know about how tax filing with partners works with an LLC. 

Remember, a series LLC is unique because it has a parent LLC and a series of children LLCs under it. Each entity in the structure provides its own layer of asset protection and anonymity and is protected against risk from other series. As a real estate investor, this allows you to segregate risk and hold several different properties without incurring the cost of setting up new business structures for them. 

First, the IRS treats a series LLC as a single entity. Since it’s a pass-through entity, you can choose how you want to be taxed by the federal government. You have the option to choose between being taxed as a: 

We will focus on the partnership or filing taxes with partners. 

What Options Do I Have For Filing Taxes With Partners?

Filing taxes with partners depends on a few factors. But first, let’s talk about what it means to be a partner. The IRS considers any individual who owns an asset with another individual to be partners.

In most cases, partners must file a Form 1065 to report their income, gains, losses, deductions, and credits. An exception to that is if you are married to your partner. In the case of marriage, you can file Form 1065 and then do your taxes as you normally would. 

There are some benefits of filing taxes with partners using Form 1065. 

Cash In On These Tax Tips 

Filing taxes with partners using Form 1065 can benefit you and your partner. Recall that if you’re in a partnership, you’ll have to file a Form 1065 (unless you’re married to your partner). The 1065 (and Schedule K1) may be beneficial. 

For instance, Form 1065 allows you to: 

Protect your assets

When you file Form 1065, you can move the tax liability of your business entity to the partners who have an interest in it. The form tracks your and your partner’s financial participation in the business on Schedule K1. 

The 1065 and K1 protect your assets because the total income and expenses are a single line item. There aren’t separate spaces for your properties, just for your overall income and expenses. 

Simplify your expenses

Through the ordinary course of business operations, you may encounter expenses that do not directly tie to one of your properties. When you file with Form 1065, it’s easier to specify those expenses and claim them on your taxes. 

Some examples of typical expenses you may claim on Form 1065 include the following:

Using Form 1065, you can enter the whole number as an expense, preventing messy records and bookkeeping. 

Secure loans

Banks sometimes favor Schedule K1 income over Schedule E income when you apply for a loan. The bank may look at your Schedule K1 income and accept the number of expenses you claim. 

On the other hand, if you supply your Schedule E income, banks will have predetermined vacancy credits, repairs, and maintenance that may lower your income. This may be especially harmful if you have new houses in your portfolio where you can get dinged for nonexistent expenses. 

There are some considerations when filing Form 1065. For instance, it takes a long time to get a K1, so your taxes are due on March 15. If you need to file for an extension, you must submit it by September 15. Another issue is that a 1065 and K1 can be complicated, so you may need a professional to help you prepare the forms. 

Key Takeaways

Filing taxes with partners through an LLC requires you to complete Form 1065 and Schedule K1. That rule applies to all partnerships unless you’re married to your partner. In that case, you can file a 1065 or in a different way. 

There are some benefits to filing using Form 1065, including, but not limited to, its ability to: 

It takes a long time, and it may be complicated to file taxes with partners using Form 1065, but we’re here to help. Book a free discovery call to find out how we can best solve your tax needs.

Stop Bleeding Leads: How Virtual Assistants Help REIs

Virtual assistants are a necessity for real estate investors. 

You wear a lot of hats. On any given day, you might find yourself generating leads, securing financing, chasing down deals, dealing with tenants and toilets, and more. That many responsibilities can stretch you thin. 

Sound like you? If so, you're in luck.

Today, we'll talk about how leveraging a virtual assistant enables you to delegate burdensome tasks, spend your time on more profitable endeavors, and scale your business accordingly. 

Why Should I Use A Virtual Assistant?

A virtual assistant has the potential to help you scale your real estate investing business. They will allow you to do more deals more efficiently, save on expenses, and reduce your workload.

A virtual assistant enables you to pass on some of the toils while improving the efficiency of the processes that make your business operate. The key is to have a dedicated, trained virtual assistant who understands the different nuances that accompany your specific industry. 

Virtual Assistants Save You Time

Time is your most valuable asset; virtual assistants protect that asset by taking on lead generation. 

Cold calling is among real estate investors' most effective lead generation methods. While it is effective, it is also challenging to stay consistent because of the time sink and the amount of burnout. 

A dedicated, trained virtual assistant can make 400 to 600 cold calls daily. VAs: 

Virtual Assistants Consistently Follow Up

A consistent follow-up to your leads usually means money. 

Most deals are closed by following up, but sometimes this is left by the wayside because of other equally pressing matters in your business. That costs you deals and money.

Bob Lachance at REVA Global puts the importance of follow-up in perspective:

All in all, 92% of people are done trying to convert a lead by the 4th rejection. You can automate your follow-up through the use of a virtual assistant. It takes several touches to close a deal. 

Optimal Tasks For Virtual Assistants

Another task that you can have your VA do is the property and lead research. While you are out looking for deals and securing financing, your VA can vet the properties by: 

Once you train a virtual assistant on how to do these processes, you'll be free to spend your time doing activities that matter the most to you. That could be anything from finding deals to spending time with your kids. 

Secrets To Scaling: Virtual Assistant  

There are several tasks that you can delegate to your VA. These tasks are essential but may not necessarily be the best use of your time. As a result, it might be ideal to leverage the skills and expertise of a virtual assistant. 

The most common tasks for scaling that a VA can assist you with include, but are not limited to: 

Save Money With A Virtual Assistant

As you grow your real estate investing business, you'll need help. A VA can provide you with that help efficiently and for less money than hiring an in-person or in-house assistant. 

Bob Lachance at REVA Global breaks down the savings: 

Virtual AssistantIn-Office Hire
- 20 hours: $212 per week 
- 40 hours: $424 per week
- Benefits: 
Paid time off
Health insurance
Company paid training
- Technology and equipment are provided by VA
- Office space provided by VA
- No state or federal taxes		- Average Salary for College Graduate: $35,000 to $45,000
- You pay for the benefits package
- Technology and equipment are your expense
- Office space provided by you
- State and federal taxes

Key Takeaways

Running your real investing business takes a lot of energy and time. It often requires you to take on several different responsibilities. You have to grow and maintain your business through steady leads. 

You can reduce the time you spend generating leads by leveraging the skills of a virtual assistant. A VA can handle the following tasks with accuracy and ease: 

Generating leads is a time-consuming process for one person. The time sink and attention to detail it requires can cause even the best of us to miss leads or burnout. If you're not working efficiently, you may let leads languish, pile up, and ultimately lose those opportunities. 

Are you ready to speak with an expert? Learn about our comprehensive solutions you can use to achieve financial freedom, reclaim your time, protect your assets, and build your legacy. Book a FREE discovery call now.

Inflation Reduction Act Impact on Investors

Do you know much about President Biden's Inflation Reduction Act? If not, you're not alone. 

This bill, signed into law in August 2022, is new and pushes many real estate investors into murky waters. 

The IRS hasn't provided clear guidance on the Inflation Reduction Act, and many wonder what the new law means for the real estate industry. 

We'll show you the most relevant portions of the Act and how it might affect you as a real estate investor. This discussion won't be a comprehensive guide, but it will demystify some of the sections of the Act that influence your bottom line. 

What Is the Inflation Reduction Act?

The Inflation Reduction Act (IRA) was passed in the Senate and House of Representatives; President Bident signed the legislation into law on August 16, 2022. There is good news for real estate investors in the bill. 

In most cases, the IRA should not raise your taxes; instead, to combat inflation, the IRA created the following ways to increase tax revenue: 

The increase in enforcement might affect you as a real estate investor. An increase in enforcement probably means more audits due to more IRS agents, but you can protect yourself with good bookkeeping practices. 

Reducing Interest Rates, Probably

It's in the name–the bill aims to reduce inflation. With a reduction in inflation, the Federal Reserve can start easing back the interest rate hikes it's been implementing. This change takes time, but the end is–ostensibly–near, and Chairman Powell might be willing to ease up on the aggressive measure taken to date. 

That's good news for a real estate investor because lower interest rates should coincide with favorable mortgage rates; reasonable mortgage rates should result in more property deals.

One of the most relevant portions of the bill for real estate investors is the $369 billion earmarked for green energy and energy security. 

The Impetus To Go Green

The IRA provides $369 billion to tackle the climate crisis in the United States. The primary provision is tax incentives and credits for homeowners, businesses, and investors. 

Energy Costs For Real Estate Investors

The cost of energy increased to historic highs in 2022. As a real estate investor, you likely incurred increased utility bills in your properties, and that added cost significantly impacts your cash flow. 

An investment in green energy ideally will lower the cost of energy across all sectors, including for you. 

Another provision in the bill may help real investors mitigate the energy cost while also receiving tax credits by going green. 

Focus on Solar Energy

The relevant section for the solar panel tax credit is §13102 of the Inflation Reduction Act. This section extends the commercial tax credit for solar panels to 2034. 

Starting on January 1, 2022, your max tax deduction will be 30% of the solar panel's cost to your real estate property. The solar panel credit no longer has to go to your primary residence. 

Here is an example illustrating how that credit works for a real estate investor. 

Suppose you have a single property that you own and lease to tenants. You invest in a solar panel system that costs about $13,000. If you meet the requirements and earn the tax credit, the IRS will pay for 30% of the system, or $3,900. 

That's a good incentive, but additional benefits have to do with depreciation. You already have the 30% tax break, but you also have the provisions of 26 U.S. Code § 168, which gives energy property a 5-year life. That means you can depreciate the value of the panel over five years.

That matters for real estate investors because you get multiple benefits from installing solar panels: 

The federal government has stipulations for these credits and benefits: 

Exciting Electric Vehicle Rewards

These incentives apply to your real estate business' commercial vehicles. The IRA expands the 30d clean vehicle tax incentive through 2032. The incentive includes: 

Key Takeaways

The Inflation Reduction Act is probably a good thing for real estate investors, but we need further guidance from the IRS to understand its full impact. 

While there may be minor changes to the law and enforcement, a real estate investor should enjoy the benefits, including: 

Do you want to learn more about how to secure your financial freedom? Book a free discovery call to learn how to handle the new law and your potential taxes.