All Forum Posts by: Brandon Elliott-Pandey

I greatly admire the accomplishments of seasoned professionals and would be honored to gain insights from experiences. Could you folks kindly share some of the key strategies or decisions that helped you persevere during challenging times as a  investor? Additionally, I am curious about any sacrifices you may have made on your journey to success.

Furthermore, I am an avid reader and believe in the power of learning from others. Are there any specific books or resources that you found particularly valuable in shaping your approach to real estate investment?

Thank you for taking the time to read this message 

-Jacob

Greetings!

As someone eager to learn and navigate the complexities of real estate investing, I believe your guidance could provide invaluable direction.

I am particularly interested in understanding the best advice you received or discovered throughout your real estate investment journey. Whether it's related to strategies, challenges, or principles that have shaped your success.

@Brandon Elliott-Pandey, yes this can actually be a very strategic decision by you.  As others have mentioned it isn't entirely free.  There would be your brokers cut.  And you would pay potentially ordnary income tax on the commission.

the time to consider this is if you are having a down year or have some pent up losses you can bring to bear.  You can then offset these operational losses against your income.

However, if you're having a great year income wise with no losses to offset then you would not want to take a commission.  Because you can leave more money inside the 1031 where it will stay tax deferred.

and the 3rd option (just because I'm a Goldilocks guy) is to not take a commission (you don't pay ordinary income tax).  Instead, do the 1031 but take out some cash for what you need.  This is the partial exchange referred by @Sean O'Keefe and @David M..  You do pay tax on that amount.  But it is capital gains rate not ordinary income.

@Brandon Elliott-Pandey

Sure...  But, you lose the split with broker, and the income is fully taxed including self-employment tax.  Just take the funds out as "boot" and be taxed as long term capital gains or depreciation recapture...

If you are just going to use with your next investment, then just stay within 1031 process.  Doesn't make sense since its just a small percentage that you can take out unless you are trying a massive sales commission, but its still taxed heavily.  

You will pay income on the fee no? Doesn't that defeat the purpose? 

Investing in real estate is just different, not necessarily better or worse.  The reason the returns are better is because it is a highly leveraged asset, and you often get a lot of sweat equity return on the project as a real estate professional.  There is still substantial risk in real estate, and leveraged assets always introduce an additional layer of risk - ask anyone who was around during prior crashes.

Many folks when the look at true passive investing...they want to invest, not find a new job.  I don't think deciding to do a 401(k) versus starting a business (real estate) need to be mutually exclusive, and in many cases once you get to "retirement" those qualified accounts can be a useful income planning tool, especially if one funds a mix of Roth and Traditional balances.  Those qualified accounts can even be used to invest in real estate in various ways.

If you are just looking for your father in law to not think you are an idiot for not funding your 401(k), I would come at it from the standpoint that you are deferring making those contributions to start a business that you anticipate to have better returns due to the leverage and sweat equity you are putting in.  It's a business decision.