Invest in a Bank: Yay or Nay?

[Aaron Hunt]

I’ve been an RE buy and hold, over all else, investor for a while now. 

Besides maxing out our 401k(s) we just put our alotted ‘investment’ income into real estate.

I usually aim to buy one property per year. Occasionally, I have dabbled in PeerStreet and WeFunder as well.

Has anyone here gone off the beaten path and invested in a physical B&M bank in their town?

The opportunity recently came across my desk, and I’m really considering it but have no prior experience to go with.

The Board of Directors has a proven track record with a previous bank that was acquired and from what I can see they’re all fairly heavily invested in the new venture as well (skin in game).

Does this cause or raise any IRS/tax related issues that I should be aware of? What are the major risks here? Any benefits from a tax standpoint? What is the best way to legally and tax-advantaged way to hold these “shares”?

This is an investment where until the bank goes public or is acquired or starts paying dividends I would not see a dime returned to me.

Would be cool to “own a bank”, but need to play it smart!

Thanks in advance to anyone who can chime in.