1 hr 6 min
E021: Demystifying Tax Strategies and Investments with Chad Gallagher Wealth Building With Friends
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- Investing
Chad Gallagher is the co-founder of SlateHouse Property Management, which currently manages over 7,000 units across the Mid Atlantic, SouthEast, and Southwest with local offices throughout.
Today, he's going to teach different strategies to move pieces around so when the money comes in, you don't pay tax on profit.
Here’s what we talked about:
How Chad got into property management
What is accelerated depreciation and how to make use of it
Why you should refinance a property and who can help you do it
People you should be talking to
Real estate investing strategies
Episode Highlights:
Some Work You Should Be Doing When Getting into Real Estate Investing
Most Americans get a paycheck. It's ordinary active income. And on that, you pay taxes. Think of it as the red bucket. Then there's this green bucket, which is this glorious world of passive income.
Have a portion of your week allocated towards investing time. Here are some people you should be talking to your accountant, real estate agents, and syndicators.
Look at new green energy opportunities because that's where the world's headed to Who can you meet? Who can be educated? Read the company earnings of different companies because they'll tell you exactly what they're doing and why they're doing it.
Real Estate Investing Strategies
Choose the right guide. The first part of this is who you are working with. You should have a team of 10 to 15 to 20 people who you are using and with a couple of different real estate agents at all times. If you believe in investing, there's no rule that says you have to have one real estate agent. Have a whole bunch of people out there scouting for opportunities for you based on whatever you're looking for across the country. You don't even pay them until they find you a deal.
Work with an agent who understands investments, specifically B class properties because, in general, they are the most predictable in terms of returns.
Think about investments in 10 years because you can't accurately predict what's going to happen in six months. And 2020 is a great example of that.
Understanding Appreciated Depreciation
Depreciation is basically how quickly you’re writing off an asset over time based on what type of asset. This is the layman's version. And most properties depreciate over a long period of time, 27 years or more. What's fascinating about accelerated depreciation is it allows us to really compress that depreciation into one or maybe two years. When other passive income is coming in, these investments you're making are actually being used to write off taxes.
That's how you play the game where you can invest money and have more tax write offs. Passive income spins off money for the rest of your life. And that's how you start winning and stop just trading hours for dollars where every dollar is taxed at 35%.
Why It Makes Sense to Refinance Properties
You don't pay taxes on refinance. You may refinance an asset four or five times in your life and that's a home run. So you can pay off the asset and then refinance it, and the refinance comes back, and it's all just cash.
Interest rates are so low and appreciation has just gone through the roof. It's going to keep going when we have inflation. So people will be sitting on a ton of equity. You can take that money out and put it into projects and be making that 15% IRR (internal rate of return). That's leverage and that's how you start to change the game
Links:
www.slatehousegroup.com
Chad Gallagher is the co-founder of SlateHouse Property Management, which currently manages over 7,000 units across the Mid Atlantic, SouthEast, and Southwest with local offices throughout.
Today, he's going to teach different strategies to move pieces around so when the money comes in, you don't pay tax on profit.
Here’s what we talked about:
How Chad got into property management
What is accelerated depreciation and how to make use of it
Why you should refinance a property and who can help you do it
People you should be talking to
Real estate investing strategies
Episode Highlights:
Some Work You Should Be Doing When Getting into Real Estate Investing
Most Americans get a paycheck. It's ordinary active income. And on that, you pay taxes. Think of it as the red bucket. Then there's this green bucket, which is this glorious world of passive income.
Have a portion of your week allocated towards investing time. Here are some people you should be talking to your accountant, real estate agents, and syndicators.
Look at new green energy opportunities because that's where the world's headed to Who can you meet? Who can be educated? Read the company earnings of different companies because they'll tell you exactly what they're doing and why they're doing it.
Real Estate Investing Strategies
Choose the right guide. The first part of this is who you are working with. You should have a team of 10 to 15 to 20 people who you are using and with a couple of different real estate agents at all times. If you believe in investing, there's no rule that says you have to have one real estate agent. Have a whole bunch of people out there scouting for opportunities for you based on whatever you're looking for across the country. You don't even pay them until they find you a deal.
Work with an agent who understands investments, specifically B class properties because, in general, they are the most predictable in terms of returns.
Think about investments in 10 years because you can't accurately predict what's going to happen in six months. And 2020 is a great example of that.
Understanding Appreciated Depreciation
Depreciation is basically how quickly you’re writing off an asset over time based on what type of asset. This is the layman's version. And most properties depreciate over a long period of time, 27 years or more. What's fascinating about accelerated depreciation is it allows us to really compress that depreciation into one or maybe two years. When other passive income is coming in, these investments you're making are actually being used to write off taxes.
That's how you play the game where you can invest money and have more tax write offs. Passive income spins off money for the rest of your life. And that's how you start winning and stop just trading hours for dollars where every dollar is taxed at 35%.
Why It Makes Sense to Refinance Properties
You don't pay taxes on refinance. You may refinance an asset four or five times in your life and that's a home run. So you can pay off the asset and then refinance it, and the refinance comes back, and it's all just cash.
Interest rates are so low and appreciation has just gone through the roof. It's going to keep going when we have inflation. So people will be sitting on a ton of equity. You can take that money out and put it into projects and be making that 15% IRR (internal rate of return). That's leverage and that's how you start to change the game
Links:
www.slatehousegroup.com
1 hr 6 min