they don’t know about them. Keep in mind that tax benefits aren’t available with other asset classes in the same way they are in real estate. I used my current portfolio to buy more properties, and I always reinvested any positive cash flow. This was accomplished through 1031 exchanges, using HELOCs, and cash out refinances in properties that grew in equity over time. All of these are tax deferred or tax-free strategies to access equity in a property that can then be reinvested in additional properties. I further compounded the depre- ciation by running cost-segregation studies on all properties I own. Doing this helps to accelerate depreciation by allowing me to take a massive loss on the property in the first year, which in turn, offsets the income I earn from all income sources. By doing this, it allowed me to have more capital to reinvest and immediately earn a return on the capital that would have otherwise been paid in taxes. All investment properties in my portfolio show a loss every year through even, normal depreciation and expense write-offs. Although these properties have a positive cash flow, the tax benefits at my disposal allow me to substantially reduce my taxable income. These same benefits are available to any investor who owns rental real estate. This is why we often refer to the cash flow we receive from rentals as “tax free income.” For example, If I bring in $100,000 per year in tax-free cash flow, it is the equivalent of earning around $175,000 of earned income based on my current state and federal tax bracket. It’s also common for investors to not track expenses properly, which means that they can’t take full advantage of all the tax deductions. It’s estimated that around 97% of people who
own investment properties have at least one inaccuracy in their investment tax filings.
or 20 bad contractors or property managers before finding the right fit. At Rent To Retirement, we have these team-building resources and will make them available to you across the country, which may prove invaluable when you’re trying to gain long-term success as an investor. During my time as an investor, I’ve only taken advice from people who are in the place I want to be. I’ve specifically sought out mentors who have cultivated a level of success I’m striving to achieve. There are many people who are quick to pass out opin- ions on things they aren’t experienced with, which is especially common in the real estate investing sector. I never listen to these people. Instead, the professionals I’ve gained advice from are always more successful than me. I find ways to add value to their life or business, so they share a few nuggets of knowledge on how they earned their success over time. This process alone has made me millions of dollars! I hope you can see that following these five steps consistently over time is an effective way to create financial independence and genera - tional wealth via real estate investing. It does take time and effort, but it’s also not an overly complicated process. My biggest piece of advice is to simply start investing now and never stop investing. Continuously apply all of the lessons you learn to become a savvier and more success- ful investor. Real estate investing is a lifelong journey—and there’s always something new to learn. •
5. I’VE ADDED THE RIGHT PEOPLE TO MY TEAM. I’ve made sure to surround myself with high-level professionals in all aspects of my investing career. Every single person I add to my “investment team” is a professional investor themselves. It allows them to provide me with the best advice pertaining to the investing goals I’m working toward. The team you build is essential to your success as a real estate investor. The types of professionals you should work with include financial advisors, accountants who specialize in real estate, and tax strategists. Keep in mind that tax strategists differ from accountants. An accountant is more defensive in nature when it comes to preparing and filing taxes for you. Tax strategists, on the other hand, are on offense and will help you with strategies that optimize your portfolio. Additionally, you’ll need to find lenders that offer multiple loan products, lend in multiple states, and are also investors themselves. Search for contractors, property managers, brokers, and builders who are all professional investors. This isn’t an easy or quick process. However, I’ve always found the right people to work with, and I’ve done whatever it takes to keep them. At times, this means going through 10
Zach Lemaster is the founder and CEO of Rent To Retirement. Lemaster is a seasoned real estate investor who has accumulated a large portfolio of rental
properties across multiple markets, including sin- gle-family, multifamily, commercial, and new construction. He is passionate about educating others on the numerous benefits of real estate investing and how to use real estate as a means to create the lifestyle each person desires.
56 | think realty magazine :: november – december 2023
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