All Forum Posts by: Jacob Rosenkranz

I keep my funds in stocks with a pretty simple ratio...

10% QQQ

45% VOO

45% SCHD 

The risks are of course if you have to pull capital out while the markets down. If you have $50k and need to pull $50k this is an issue but if you have a few hundred thousand need to pull $50k out when its down from ATH it's not as big of a deal on total portfolio performance. I also have HELOCS and portfolio backed lines of credits so if market was 50% down in a rare stockmarket crash I could pull cash out without actually selling any stocks. 

Where I am putting my money now as a passive investor is in RV Campground Resorts. Much higher cash on cash returns and equity multiples. Averaging 15-20% cash on cash and 3x multiple. And the added benefit that you can go there and have fun. Create great lasting memories with your family other than just cleaning out apartments with your kids.

 I have also invested in 506b deals - from the passive investor side I haven't found any difference in the deals than the 506c deals I have invested in.  

@Jacob Rosenkranz, the simplest answer is: yes, you will very likely have taxes owed. 

But there is a good chance you will have taxes owed over a period of time, not all caught up at once, because your portfolio is not likely to all be sold in the same year, if you are laddering in investments over many years.  If you assume a 5 year hold on all assets, you will have 5 years of deals selling that will be realizing gains at each exit.

The way I visualize is there is a running tab of passive income and passive loss. As long as you have enough passive loss to offset the income, there is no tax reliability.

For a simple case for ease of calculation - $100k every year and you get 50% of it as passive loss, no distribution along the way, 5-year hold and sell.

after 5 years, you accumulated $250k passive loss. Your year 1 syndication is sold and profit+recapture is $250k (it was a home run).

for that year, there is no tax.

However, for your year 2, 3, 4, and 5 investments, you won't have a passive loss to offset the gain. If you reinvest the proceed of the year 1 investment, then it could generate a passive loss for the year 2 investment. but you could eventually run out of passive loss to offset.

Generally, for most LPs, recapture wouldn't be an issue as their losses would have been limited assuming no other passive sources. 

There is no recapture on the deal that you already exited and that you didn't pay any taxes by layering the new syndication. But this strategy doesn't shelter all your recapture. 

@Jacob Rosenkranz - you don’t soumd “new to real estate”!   Great question.  And you got some good replies above.