Investment

My rules for investing are simple.

Never buy raw land unless you intend to build right away. Municipalities can change the rules and the fees over time. There is no depreciation. Sometimes there are monthly homeowner fees.

When selecting properties, make sure you would be comfortable living there in the future.

Always know the rules before buying vacation rentals.

Special commercial properties are worth considering especially if you are the primary tenant.

Is this a good rental?

Location and condition are important to avoid large capital outlays. You should also consider the vacancy factor. Survey the rents and examine nearby properties that could affect equity. Look at trends and consider both the worst case scenario and the “highest and best use”. I have an app for determining market rents.

Avoiding capital gains!

Timing is everything! You are excluded from capital gains on your personal residence up to $500,000 per couple or $250,00 per single. If you own more than one residential property, sell one and move in to the next. Current tax laws allow you to do this every five years. Learn the details by consulting a tax accountant. Pay special attention to timing after the death of a spouse to get the full $500,000 exemption.

Utilize the 1031 Tax Deferred Exchange to sell large properties and exchange into smaller properties to make the capital gains bite smaller.

Using your 401K