Message From the CEO
As inflation grips the nation, interest rates are on the rise. Beyond the concern of an impending recession, higher rates increase borrowing costs and stock market volatility, impacting both real estate and traditional market investments. These conditions call for a review of your investment strategies.
We have enjoyed low interest since March of 2020, when the Federal Reserve reduced rates to near zero, providing ultra-low borrowing costs and driving economic growth. In March 2022, the Federal Reserve raised rates in response or record-high inflation. With the goal of cooling prices, the Feds anticipate six more increases in 2022, which will directly impact the stock market and real estate investments.
Actionables include eliminating non-leveraged debt like credit cards or personal loans and allocating a portion of your portfolio to investments that perform well in recessionary conditions.
Recession-proof investments include holdings that remain stable in the face of amplified stock market volatility. Multifamily housing can provide stability because apartment communities offer safe, clean, and affordable housing for others. Short-term leases keep up with inflationary pressures, and real estate tends to hold its value, even when rates rise.
With these things in mind, we focused this month’s articles on three principal things:
- Ways to increase earnings potential through real estate syndications
- Increasing profits by capitalizing on tax benefits
- Employing strategies that allow you to use retirement funds for recession-proof investments like commercial real estate.
P.S. 2022 is the last year the IRS allows 100% bonus depreciation, which could reduce taxable income. In 2023, the maximum bonus permitted depreciation is 80%. Then it drops to 60% in 2024.
How Real Estate Syndication Deals Make Money
You invest to earn a profit. Stocks create gains through dividends and appreciation, while bonds pay interest.
Real estate syndications invest in commercial properties, providing multiple opportunities for profits tax-efficiently. We unpack the primary ways real estate syndication deals produce gains here.
Sources of Capital for Passive Real Estate Investors
Commercial real estate offers lucrative investment opportunities, often surpassing market-rate returns without additional risk.
However, the higher minimum investment thresholds can become a barrier to entry. To address this roadblock, we detailed creative ways to meet these requirements, which could provide the cash needed to participate in larger commercial deals.
Tax Benefits of Multifamily Investing
Tax-efficient investments maximize returns allowing you to keep more of your money. Strategies to minimize taxes include the type of account you own and your investment choices.
Real estate provides unique tax benefits, which can increase profitability. Learn how to profit from these tax-efficient strategies using commercial multifamily real estate investments.
Using Retirement Funds to Invest in a Real Estate Syndication Deal
The Russian invasion of Ukraine caused a decline in all market indexes. The Dow and S&P 500 fell 10%, with Nasdaq skidding 20% into the bear market territory. Rapid reductions such as these could impact retirement balances for years to come.
If you are ready to reduce volatility, we can help. Learn how to diversify your portfolio and stabilize balances earmarked for retirement without sacrificing gains. To read the full article click here.