Have Investable Cash, Need Prime Investments?

Have Investable Cash, Need Prime Investments?

If you are like many individuals in Arizona, you have seen a steady recovery in your investment portfolio since the market meltdown in 2007 and 2008. You have also seen the importance of being invested in the right market and assets as they have recovered from that difficult time. Our team at KRK Realty has seen our clients’ portfolios show significant gains as the market recovers.

You may also be like many other investors who have accumulated cash in your retirement and savings accounts because of your concern over another such financial crisis. We think it is time to reassess that attitude.

The Importance of a Long-Term Perspective with Short-Term Action

The simple fact of investing is that cycles are a reality of our economic system. These are to be expected rather than feared, and savvy investors understand the importance of developing portfolios that survive and even thrive in both up and down markets.

My experience in Arizona real estate spans more than two decades. As the founder of KRK Realty & Management, I have developed both a portfolio of residential investment properties and a superior property management firm to handle my and my investor’s holdings. We have the ability to match your specific investment objectives with the right type of properties, financing and management plan.

We’ve found that taking the hassle out of owning investment property helps our clients look at this asset class with a fresh and positive perspective. Once you understand the many potential advantages of real estate finance and investments, you’ll appreciate why we have such a loyal and satisfied client base.

The Win-Win-Win Investment

Many people think they are lucky to find an investment that simply provides a good cash-on-cash return. That is one good win. Others find a way to add appreciation to their investment, adding a second win. However, I love to show new clients how real estate finance and investments consistently provide appreciation and cash flow, plus the added win of tax-advantaged opportunities.

While all investments have some level of risk, the smart investor turns those risks to their favor. If you give me, Kevin Kirkwood, a call, I will show you properties in our portfolio that can quickly and easily put you on the road to smart rental property investing. We’ll provide you with attractive options you can review with your financial adviser and add to your diversified portfolio for significant long-term returns.

Dont fall for the common Tax Day mistake by investing in the typical IRA or Roth IRa!

If you are one of the millions of Americans wise enough to regularly add to your retirement account, you understand the importance of planning ahead. However, unless you that process includes real estate, you need to reevaluate your strategy. You may not be tapping into the full power of this relatively UNKNOWN federally-approved way to save on taxes and accumulate wealth. Kevin Kirkwood helps many Arizona residents utilize this opportunity.

Make Your IRA the Landlord in AZ:
Many savvy investors understand the role real estate ownership plays in any well-diversified portfolio. However, only a small number of individuals realize that their retirement accounts, in particular self-directed IRAs, can purchase and own real estate and accumulate tax-deferred earnings.

Of course, it is common to look at real estate as an excellent way to legally minimize current tax liabilities while deferring taxes. However, it it important to know that ownership of many properties is best held in your tax-advantaged retirement account. This is especially the case for situations where your purchase generates significant returns from a property that generates substantial cash flow and profits.

The math here is simple. When you buy a property individually, you normally leverage it with a mortgage and use the interest, depreciation and other expenses to lower  taxable income. You effectively get a discount on the interest you pay a lender because it is deductible, and you save real dollars by having that deduction
.
On the other hand, your IRA doesn’t need this form of tax savings, as it already produces tax-deferred income. If, however, it becomes the banker, that interest normally paid to leverage a property effectively flows back to you, accumulating and compounding without taxes over the years.


Understanding the Relationship:
Looking at the situation another way, it helps to separate your current portfolio from your retirement portfolio. Let’s assume you have $300,000 in liquid funds in your retirement account, earning a blended average of 6 percent. Also, assume you talk with your accountant and they help you set up a self-directed IRA if you don’t already have one. If you put $150,000 in that account, it is effectively ready to serve as a bank and earn the interest you pay on your separate, leveraged real estate investments.

Once you have the account set up, let’s continue our hypothetical situation by having you buy an investment home with that $150,000 cash. Let’s also assume conservatively you will net $900 a month in rents on that house after all expenses, including property management fees and a 90 percent occupancy rate. It’s a simple calculation to show that you earn better than 7 percent on that cash flow, all now tax-deferred. That is before any subsequent long-term appreciation.
When you sell the house and take a profit, that return is also protected from taxes until you start drawing out your funds in retirement. Moreover, those profits also accrue compounded tax-deferred earnings while they sit in your IRA.

Investing in Real Estate is an Increasingly Popular Retirement Strategy
As more Americans accumulate substantial cash in their retirement accounts and interest rates remain low, billions of dollars are flowing into self-directed IRAs for real estate purchases. With the right property management firm, such as KRK Realty, this is a hassle-free way to increase your overall portfolio return while using the tax-deferred aspect of retirement accounts more wisely.


Of course, as with any such decision, be sure to check with your financial adviser to make sure of the current laws and regulations affecting any such decision. Once you do, Kevin Kirkwood will show you how to be a landlord in AZ and help you earn above-market returns.