investment

Successful Multifamily Real Estate Investor Rob Rowsell is here to explain the answer to a burning question. How can YOU can cut tax drag that is sapping the returns from your investment portfolio. Do you want to invest your money wisely? Then you need to take the time to reduce your tax expenses. That is a key component in any multifamily real estate investment strategy. Watch, learn, and then apply this knowledge. Then, you’ll start saving on your precious investment taxes!

Cut tax drag - it can be done if you do the math and calculate your investment expenses.Cut Tax Drag On Your Investments Safely And Legally

Rob starts out by explaining that there are a few major expenses that we all want to avoid as investors. Tax drag is way up there on top of that list. There are just four key ways that our favorite multifamily magnate Rob Rowsell recommends for all investors to cut tax drag:

Choose Structure Over Deduction

First of all, you must make sure that you will always pay yourself tax efficiently on payday. Do you earn a W2 income working for a business that you own? Then your CPA will tell you that you must pay yourself a typical salary range for that position. However, you will want to pay yourself based on the low end of that salary range. That way, you will pay much less in both your income and your payroll taxes. If you are a smart business owner, then you should be able to afford to live on that smaller salary amount.

This practice of paying one’s self tax efficiently is a key component of tax rate arbitrage. The concept of tax rate arbitrage means you use different types tax rates within your business in order to lower your overall tax bill.

Finally, you will need to make sure that you will plan your exit before you go in. This means that you will decide the proper legal entity for your business, such as an LLC, S-Corp, or C-Corp. None of these corporate entity designations are wrong in and of themselves. You must decide which one is the right choice for your specific industry and your intended  pursuits.

Cut Tax Drag By Investing All Of Your Taxes Efficiently

Without a shadow of a doubt, savvy tax planning is the lowest risk way for you to immediately boost your investment returns. Rob repeats this important mantra often: saving on your taxes will create another income stream! Rob has saved well over $250,000 in a single year, all because of his CPA’s savvy tax planning strategies.

Most of the time, you will want to put your long term capital growth investments in your taxable accounts. Your ordinary income cash flow investments, on the other hand, should all go in your tax advantaged accounts. A Roth IRA account is one example of such a tax advantaged account.

Last of all, in order to invest tax efficiently, you should leverage your unrealized gains so that they will compound tax free. Your unrealized gains might include the value of your property increasing after you purchase it. Perhaps you bought a business and then you increased the income that it is generating. You are not taxed on that business income. That way, you could take out some low interest loans from your lender against those numbers. You could use that money in order to scale your business, so you can realize even greater success!

Pay With Your Pre-Tax Dollars

Rob’s third principle to cut tax drag is that you should pay your expenses with your pre-tax dollars. What does that mean for all of us investors? Make sure that you will push all of your legitimate business expenses into your business. When you do that, then you will earn your business an automatic discount. Unlike your employees who are paid and then taxed, an LLC business owner can pay their expenses before they are taxed on their earned income.

Plan BEFORE You Play

Finally, you will need to plan what the tax impact will be of each and every potential investment that you intend on making. Once you reach Rob Rowsell’s high  level of real estate investment savvy, you might just know by June what you will pay in taxes at the end of the year! That is one of the many advantages of regularly consulting with an experienced, hard nosed CPA on your investment plans.

Just make sure that you meet with your CPA in order to plan your tax strategies regularly. Keep them in the loop as early in your planning process as possible. When your CPA knows all the machinations of your plans, they can stop you from making costly mistakes. Many plans can change when you are drawing up investment strategies. Whenever your plans take a left turn, call your accountant immediately, so you can make the necessary adjustments.

Join Our Multifamily Real Estate Investing Community

Do you own your own multifamily rental properties? If not, do you plan to do so one day? Then you need to consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build your wealth in the multifamily real estate business. It’s not as easy as it looks from the outside! Property taxes, liens, and costly legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! So sign up today!

 

Wealthy Real Estate Investor Rob Rowsell is here today to share his ultimate tax saving secrets in part one of this two part series. Let’s all watch and read on to learn the first two out of four tips. Do you want to make the absolute most out of all of your investments and avoid the scourge of tax drag? Well then, this series is definitely for you! Let’s go!

Tax Saving Secrets - Keep Your MoneyRob’s Tax Saving Secrets Revealed, 1 and 2

Rob starts off the clip by defining the often discussed concept of “tax drag”. Tax drag is the wealth draining resistance that taxes can make on both your investments and your earnings. Not only can it cost you cash today, it can also rob you of potential future compounded earnings from all of those lost dollars.

How can you as an investor get ahead of this disturbing trend? First off, you will need to start meeting with your accountant on a regular basis. Specifically, scheduling a September meeting with them to report the financial moves you’ve made thus far in the year is a great idea. Once your CPA is aware of those moves, then they can help you formulate strategies in the remaining three months. These strategies will help you to minimize the taxes you will owe at the end of the fiscal year.

Save On Taxes By Emphasizing Structure Over Deduction

The first of Rob’s tax saving secrets we will discuss is Structure Over Deduction. All of us will look for deductions when it is tax time. If you are not also structuring how your money is handled during all twelve months of the year, then you will not need to lean so heavily on those deductions in April.

One example of this strategy is to make sure that you pay yourself tax efficiently. Rob’s financial advisor once estimated that he should be earning a salary within a wide range. By paying himself on the low end of that proposed dollar range, Rob is being conservative monetarily. Remember, when it comes to paying your own taxes, you are in charge. You are the quarterback on the field!

Rob Defines The Concept Of Tax Rate Arbitrage

Tax Rate Arbitrage is another one of Rob’s favorite structuring tools in his tax saving secrets toolbox. Rob decided at one point that he would form a management company structured as a C Corporation. That C Corp received a fee from both his real estate and automotive repair businesses for the services that they rendered. The C Corp was taxed much more efficiently than any of his other businesses were. Therefore, he saved himself money on taxes all around. Entities such as a C Corporation exist for just two reasons: in order to protect your assets, and to save you money on your taxes.

What Does It Mean When You Plan Your Exit Before You Go In?

Another essential financial structure strategy is when you Plan Your Exit Before You Go In. In the real estate business, most investors’ end game is an obvious one. You may have a written three to five year plan in place for your multi-family property investments. Whatever amount of money you choose to invest in each of them will help your tax advisor to give you the best advice. That means they will show you how to structure your businesses to save on taxes.

Tax Saving Secrets Continued: Invest Your Saved Taxes Efficiently

Rob continued with a game changing hack that you can apply today! Savvy tax planning is the absolute lowest risk way to immediately boost your return on investment. That strategy means knowing what your investing end game is. Savvy tax planning also includes deciding which wealth bucket you will be investing money from.

Generally, your long term capital growth investments will go straight to your taxable accounts. This is because they are not taxed at the government’s highest rates. “Ordinary income” cash flow investments will go in tax advantaged accounts instead. Rob used an example from his own investment history. He once made a short term loan to some house flippers in his investing network. Since he used a sum of money from his own Roth IRA account, he was not taxed on that loan amount. Also, the returns from that investment could go right back into his retirement fund. That way, those returns could continue compounding.

Conclusion: Money Saved On Taxes Is A Revenue Stream

Remember, all of the money you save on taxes can be counted as a revenue stream! Once again, tax drag is the polar opposite of a revenue stream. It is lost income from the annual taxes that you pay. What if you had not paid those taxes? Then you could have made compound returns by investing those funds over a period of time.

Join Our Real Estate Investment Community Today!

Have you invested funds in multi-family rental properties? If not, do you aspire to do so one day? Then you should definitely consider joining our online discussion group, the ATL Inner Circle Community! Each and every month, Rob Rowsell will teach you what you must do so you too can build wealth in the real estate business. It is not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate. Therefore, having a successful guide in your corner like Rob is a must! Sign up today!

 

Now that you’ve learned how to stack up cash, you’ve got to learn how to invest your assets! Investing for maximum return means building assets and then repurposing them over time. Invest wisely and watch your wealth grow!

Investing For Maximum Return - Winning the money gameInvesting For Maximum Return – Building Assets and Repurposing Them

In Act 1 of our Money Game series, Rob detailed strategies for maximizing our active income earnings. Act 2 is all about investing for maximum return. Specifically, we are buying and building assets that will return us cash.

When it comes to investments, Rob describes the assets that return compound interest as the “8th Wonder of the World”. Apologies to Andre the Giant. The concept of the “doubling clock” comes up. When you invest in assets that accrue compound interest, and hold them, they will double in value over time. The goal is to invest your surplus money and make it work for you. After all, you are not just investing in assets. You are also investing in yourself. And nobody wants to invest in themselves unless they are investing for maximum return.

When you start the Wealth Clock early in life, you have the distinct advantage of time. The more time you hold good investments that compound in interest, the more “doublings” you will enjoy. Unconventional investments with unproven parties are much more tempting when you are younger. “The greater the risk, the greater the return”. If you start investing later in life, you have a whole lot less wiggle room, and tend to stay in your comfort zone. After all, you don’t want to gamble and lose it all.

Want To Learn More? Join Our Community!

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!