New Articles

Capitalizing On The Crazy Real Estate Market – With Or Without Upfront Cash

estate industrial

Capitalizing On The Crazy Real Estate Market – With Or Without Upfront Cash

How Investors Who Find Their Niche Can Prosper

The real estate market continues to experience skyrocketing prices and lower-than-normal inventory, leaving a general state of frustration and confusion in its wake.

But despite these unsettling times, real estate as an investment remains a good option, even for people who aren’t flush with cash, says Toby Mathis (www.andersonadvisors.com), a tax attorney and ForbesBooks author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same.

“There are ways to get involved in real estate without having a nickel to your name,” says Mathis, who owns several hundred pieces of real estate throughout the United States. “You could jump in and start doing this right away just by creating the relationships, finding the need, and helping put deals together.”

Mathis says a few ways to make money off real estate – with or without an upfront investment – include:

  • Bringing buyers and sellers together. Play the role of the middle man, helping investors find the properties they seek. Mathis likens this to someone giving you a grocery list. Investors specify what kind of property they are looking for and in what area, then you act as wholesaler, making connections to track down properties that fit their requirements. “There are people with massive appetites to acquire properties, and they need people who can go door to door, who know the area, who have the expertise to go out and do that,” he says. This role is both simple and difficult, Mathis says. “It’s simple because you know exactly who you’re buying for and you know what to look for,” he says. “But it’s difficult because you have to do the research and put in the labor.” Mathis says he buys many of his properties from such wholesalers. “Just recently,” he says, “they brought me a great warehouse, something I was looking for, at the right price.”
  • Owning rental property. One of the advantages of owning rental property, Mathis says, is that it provides you with passive income. Unlike the paycheck from your employer, passive income is not subject to Social Security tax or Medicare tax. It’s also not subject to self-employment tax. You do pay income tax on money you make from rentals, but deductions such as depreciation and upkeep can reduce that amount. “One of the great things about it is you can have someone else manage the property for you and sit back passively and take in the income,” he says. But there are caveats. For example, if you operate your property as an Airbnb or a traditional bed and breakfast, providing services to the guests, you can be subject to the self-employment tax, Mathis says.
  • Owning land without structures. When it comes to generating revenue from real estate, people often think about apartment complexes, self-storage facilities, warehouses or similar structures. But Mathis says there are other ways to bring in money, such as with a cell tower or by selling mineral rights.
  • Considering other lease opportunities. Another way to bring in income from real estate is to provide housing for disadvantaged groups. That could mean veterans housing, residential assisted living for the elderly, or transitional housing for non-violent offenders, among other possibilities. “There are people getting county money constantly to do transitional housing,” Mathis says. “Some organizations lease these properties, then contract them out to other organizations.”

“There are endless opportunities when it comes to real estate,” Mathis says. “It’s just a matter of figuring out which of these niches is best for you and your circumstances.”

About Toby Mathis

Toby Mathis, Esq., is the ForbesBooks author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Mathis, a tax attorney, founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. In addition, he is a successful investor and owns several hundred pieces of real estate throughout the U.S. His businesses have been featured five times on the Inc. list of fastest-growing U.S. companies, and have won numerous other awards. Mathis has authored more than 100 articles on small business topics and has written several books on good business practices, including Tax-Wise Business Ownership and 12 Steps to Running a Successful Business.

investors

When Cash Is Devalued, Where Should Investors Look For Salvation?

With a difficult 2020 receding into the past, investors are left to wonder what lies ahead for them, the economy, and their portfolios in 2021.

Unfortunately, they may find that some investing decisions are still tied to the events of last year.

Because of how the COVID-19 pandemic affected the economy, the Federal Reserve saw to it that enormous amounts of money were printed in 2020. That effort to shore up the economy also set off debates about inflation.

Reports show that in excess of 23% of the U.S. dollars now in circulation were created in just the last year, says Toby Mathis, a tax attorney, founding partner of Anderson Law Group (www.andersonadvisors.com) and current manager of Anderson’s Las Vegas office.

“This bodes well for gold and cryptocurrency as hedges, but really means investors need to be in dividend-paying stocks and real estate to avoid the hard blow of the effect of the U.S. monetary policy,” he says.  “Essentially, your cash is being devalued, so you need to buy assets that pay you.”

Mathis’ tips for investors in these tenuous times include:

When investing in real estate, target low-priced rental properties. For inexperienced investors, real estate shouldn’t be the first option, Mathis says. But for those with some investing savvy, it’s a good addition to their overall investing strategy – if they are careful about making the right moves. “You want to save up for your first property, and buy with cash,” he says. “This is the best bet for this investment actually making you money. You should pull that extra cash from stocks, or savings, and purchase a rental property between $70,000 to $120,000. Yes, properties at that price do in fact exist. You’ll find them outside of the big cities with increasing populations.”

Realize that stocks are more liquid than real estate. While Mathis praises real estate as an investment, he acknowledges it has its drawbacks if you suddenly need cash. Stocks can be bought and sold much more quickly. “I can buy a share of a stock and I could sell it tomorrow and get access to that cash within two days,” he says. “If I buy real estate, I could buy it today but I’m probably not going to be able to close tomorrow. Even if I buy with cash, it’s still going to be a week or two. And usually, your closing is going to take 30 to 60 days.” The same is true when selling real estate. “If you have an unexpected life event — your car breaks down, you lose a job, you have a medical emergency — stocks are much more liquid,” Mathis says. “You can turn them into cash much easier than you can real estate.”

Look for stocks that pay dividends. Mathis says investing in stocks is a smart move for both experienced and inexperienced investors, but he also cautions that not all stocks are equal. Some pay dividends, some don’t. He recommends avoiding the latter. “If you’re investing in stocks that don’t pay dividends you’re leaving close to half of the benefits by the wayside,” he says. “And you’re not going to do as well. You have to invest in dividend-producing companies to see true growth.”

“When people ask me whether to invest in real estate or the stock market, my answer is always ‘yes,’ “ Mathis says. “Either one can be great. I still say stocks are best for investors who are just starting out and need to gain some knowledge and experience, but ultimately you would like to have both.”

_____________________________________________________________

Toby Mathis, author of the upcoming book Infinity Investing: How the Rich Get Richer And How You Can Do The Same, is a founding partner of Anderson Law Group (www.andersonadvisors.com) and current manager of Anderson’s Las Vegas office. He has helped Anderson grow its practice from one of business and estate planning to a thriving tax practice and national registered agent service with more than 18,000 clients. In his work as an attorney, Mathis has focused exclusively in areas of small business, taxation, and trusts. Mathis has authored more than 100 articles on small business topics and has written several books on good business practices, including Tax-Wise Business Ownership and 12 Steps to Running a Successful Business.