This content was created by MARK KOHLER. This content was uploaded by MARK KOHLER. This is a YouTube video titled "5 Reasons to Buy Rental Real Estate | Mark J Kohler | CPA | Attorney" (created 2016-08-16). It is a solo tax and legal advice presentation by Mark J. Kohler (CPA and attorney) outlining five reasons to buy rental real estate: using leverage to amplify returns; tax-deferred or preferential tax treatment and exit strategies (including 1031 exchanges, charitable remainder trusts, installment sales); tax-advantaged cash flow via depreciation and deductible expenses; treating rentals as a small business with many deductible costs; and using rental property as a forced retirement-savings strategy. The clip ends with calls to subscribe, join his newsletter, follow on social media, and explore his tax & legal video library.
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Hi, Mark Kohler here with another tax and legal tip. Now, I want to give you five reasons why you should be buying rental real estate. And I'm not a real estate broker or agent. I'm your tax advisor, wanting to help you build wealth and save taxes. And before I list these five, I want to give a disclaimer here. I'm not saying you're going to put all your wealth in real estate. You're going to be diversified. You're going to have an emergency fund. You're going to be building a retirement account. There's going to be a variety of strategies you might use to also get real estate. There's some risk involved, but you may not even be buying real estate in your own backyard. Remember, the United States is our backyard. Now. You're one southwest flight in the Hampton away from checking on your real estate. So have an open mind and be considering strategies to acquire real estate and diversify your wealth. So number one, why is rental real estate so cool? Because you can use leverage and meaning Instead of investing 100,000 in the stock market, you can invest 10,000 in a rental property and borrow 90,000 from the bank. Now, when you do your ROI or return on investment, that's against your $10,000. And as long as you can cover the cost of borrowing, your return on investment is against your ten grand, not the hundred grand, because you're using the bank's money to get you to the purchase. Theoretically, you could buy 10 properties with that hundred grand, leverage your money and get a much bigger return on investment. Number two, that rental real estate is going to grow tax deferred or tax free even now, tax deferred because you don't pay taxes till you sell the property. So it's going to grow and appreciate and appreciate and the mortgage is going to go down and down and you're going to build equity and equity and then someday you may sell it and have capital gain on lower tax rate to boot. Now, if you want tax free results, you might use a 1031 exchange to defer it even further, pass it on an inheritance, you could use a charitable remainder trust and you could even use installment sales to spread out the gain over time. So lots of ways to exit that real estate and a preferred tax method. Number three, can I say tax free cash flow. Because what's cool about rental real estate is it's your rent minus depreciation, mortgage interest, property taxes, maintenance, and all those extra expenses like travel, dining, Entertainment, Home Office, PDAs, laptops, Internet, cell phone and Therefore, on paper you're losing money even though you have cash flow and thus you have tax free cash flow going into your pocket with a leveraged investment. Number four, remember, rental real estate is a small business and I want you to treat it like that. It's going to be reported on your personal tax return or on an entity and flow into your personal tax return. And even though you may have cash flow, you can have tax losses on paper that could be deductible against your other income thereby. It's a tax benefit strategy and I want you to track all your expenses related to the rental property. Remember again, travel, dining, Entertainment, home office, PDAs, laptops, all that good stuff are deductible against your rental property business. And number five, rental property is really like a forced retirement plan because once you buy that rental, a lot of us feel emotionally stuck and you've signed on a mortgage possibly. So you're going to be committed to keeping that rental alive and there's going to be months where you're going to be like, oh, this rental property is killing me. There's a lot more months where you're like, oh my gosh, that's the best thing I ever did. And folks, if you could be buying one rental property a year and just make that simple goal, where would you be 5, 10, or 15 years from now? In conjunction with the other retirement planning guys, the rental property forces you to save. We as Americans are terrible at saving. How many of us try to put away $50 or $100 into a bank account every month? But if you've got a rental property, you're going to be committed to it and take care of it and it's going to grow and build your return. In summary, you've got to consider rental real estate. And I know it's not for everybody, but it's for a lot more people out there than you realize and it could be the perfect fit for you, your retirement plan. Thanks for watching and if you love that video, I've got a lot more. Please subscribe to my channel and I shoot weekly videos that can help you in your business, personal life and better live your American dream. Also, check out my newsletter Free newsletter every week with blog articles, tips, strategies, tax deadlines. You'd love it. Also, if you like social media, please follow me on social media with some daily tips. And if you like to connect that way, it could be a lot of fun. But finally, please check out my tax and legal Library. I have 50 plus videos on these topics and more. Where I pull out a whiteboard and break them down. Hours and hours of helpful information that can better help you live the American dream.
