Wall Street or Main Street?

When investing in paper assets, the vast majority of investors don't have an honest advantage over other investors. The government does its best to keep the playing field level and fair. Real estate is different. Whether it's controlling tax exposure or utilizing inside information to gain a competitive market edge, the more legally creative you are, the greater your return on investment. Real estate offers powerful wealth-building advantages, is an integral component of a balanced portfolio, and is an important consideration for any long-term investment strategy. No other investment vehicle offers monthly income stability, tax-sheltered cash flows, leveraged returns, an inflation hedge, and the ability to defer the payment of capital gains all while backed by a supply-constrained, hard asset.

The Dollars and Sense

Many smart investors still underestimate the power of tax-deferred, compounding. The math is simple -- invest a dollar today, double it annually, and it will be worth over one million dollars in 20 years. That is, of course, assuming no taxes. Factor in a 35% annual tax rate and the return drops to $22,370. It would take another 7.5 years to reach the million dollar plateau. But what if the dollar were invested in a single investment and held until it doubled the same 27.5 times? In that case, the return would reach about $200 million pre-tax or, after paying a $70 million tax in the final year, about $130 million after-tax. The tax-deferred exchange, as defined in Section 1031 of the Internal Revenue Code, offers investors one of the last great opportunities to take advantage of tax-deffered, compounded returns.