SW Florida Real Estate
NFA firearms and real estate? What a combination! NFA firearms have proven to be a great investment over the years. Average appreciation has been approximately 15% per anum. This is pretty awesome. Buy a MP5, M16, Uzi, MAC…what have you, enjoy taking it to the range, and then resell it years later for a hefty profit. Nothing wrong with that! Real estate has proven it can be an awesome investment as well, but with distinct differences.
Not all states allow NFA ownership.
NFA may have great appreciation, but you don’t get the benefits of depreciation as you do with real estate.
NFA firearms are generally a cash purchase. Real estate is often financed by banks and private lenders.
How was your 2017? This is a new purchase. Imagine a 50K paycheck for BUYING a house. Remember, you make your money when you buy. The seller was very motivated and needed money fast. It is worth 200K and I purchased it for 145K. The seller was happy and I was happy. The key to building a real estate empire is OPM-other peoples money. I purchased this property with 25K of my cash, and 120K of OPM.
This is an investment home I purchased in Cape Coral recently. It offers over 2150 square feet of living, 4 bedrooms, 2 baths, and a 2 car garage. You can purchase a similar home in the 170K range. Compare this to prices in some of the more expensive areas in the Northeast. Forget the snow and come enjoy our sunshine, pristine beaches, and awesome boating and fishing.
Along with NFA, real estate is my other passion! I have been a licensed Realtor for years in the SW Florida market. In addition to the great SW Florida lifestyle it has provided a great additional retirement income. While the rest of the country has enjoyed 2′ or more of snow, we have enjoyed burying our feet in 2′ of sand. While Boston, New York, and Michigan have freezing temperatures in the teens, we are enjoying sunshine with most high temperatures in the high 70’s and low 80’s. If you want to escape the brutal winters and state income taxes offered in the North and Northeast please allow me the opportunity to show you the big difference that SW Florida has to offer.
This is our newest investment property in Cape Coral. Where else can you find a great 3/2/2 house with over 1500 SF of living area for under 150K? With an annual of appreciation of approximately 8% per anum, mild winters, pristine beaches, art centers, music venues, and a state with NO income tax and you will see why over 190,000 people moved to Florida last year. We passed New York in population and are now the third most populous state behind California and Texas. What are YOU waiting for? Everyone is welcome!
Here are a few facts:
We have property appreciation at more than double the national average.
We have no state income tax.
Florida has some of the best job growth in the country.
You can buy houses in Lee County with median prices about $170K.
You can buy houses in Collier County with median prices around 400K.
Investing In Real Estate? Want to know why you should?
The answers are easy. There are several reasons why, and each one, when coupled with the others, builds a strong case for real estate investment. Let’s look at them! There are several, and we offer them in no specific order because they all add up.
Here are a few benefits to investing in real estate:
Uncle Sam LOVES real estate investors. They give preferential treatment to real estate investors not offered to other types of investors. Buy a rental property and hold it long term, and you qualify for long term capitol gains. This is generally a lower tax bracket and therefore you owe less taxes. Another factor is a paper loss called “depreciation”. Depreciation is real but not always on your dime. Real estate wears out. Roofs wear out. Septic tanks wear out. A/C units wear out. Depreciation, as allowed by Uncle Sam, means that you get to write off 100% of the cost of your property (excluding land-which does not wear out) over 27.5 years for residential property. What does this mean? It means that you get to claim a deduction of approximately 3.6% of the cost of your property each year. So, you purchase a property for $110K. Say the land value is 10K. So, you get to write off 3.6% of the structure cost (100K) over 27.5 years which is $3600 per year. This is automatic each year. You are not required to spend one dime to get this paper loss! Suppose you purchased the property and it paid you a net in pocket amount of $7200 the first year. Once you take your depreciation, you only have to claim $3600 of the $7200. What other investment does Uncle Sam allow you to make money on and only claim part of it?
Cash flow: If you invest in stocks, bonds, gold…whatever…..do these investments cash flow? Do they put money in your pocket every month? No. Buy real estate, buying wisely, and it should pay you a profit every month you own it. Not only does it pay you a profit if you purchased wisely, but you don’t have to pay taxes on all of it as illustrated above (depreciation).
Appreciation: If the market goes up in value, you make money by simply owning the property. Not only that, you don’t have to pay one dime of taxes on the appreciation until you sell…and even then…you don’t! Uncle Sam has a special provision in the tax code called a 1031 exchange. This allows investors to sell a property, make unlimitied profit on it, and defer the taxes until a later date…or never pay taxes on the gain.
So it all adds up…and it adds up BIG as to why there is no better way to invest than real estate. Real estate is NOT a get rich quick investment but it IS a get rich investment. There is never a bad time to buy real estate-only a bad time to sell. Long term investors generally will do very well over their holding periods.
Lets take an actual example of one of my deals:
Purchase price: 70K
Rehab costs: 15K
All in costs: $85K
I rent this property for $1195 per month. That is $14,340 per year.
My costs (excluding land) are roughly 80K. I get to depreciate it 3.6% per year which is $2880.
This leaves a profit of $11,460.
This is not all! Don’t forget, all expenses related to the property are tax deductible. So, I get to write off my property taxes, insurance, and maintenance. Lets say these total about $4500. Now, we are down to a “profit” of $6960. Not bad, but we are not done. Because I have to maintain the property, do routine inspections, use a computer and quickbooks for keeping my business, buy a printer for receipts, buy postage stamps, envelopes, pens, and many other business related expenses, and deduct the mileage for driving to and from my property, this might account for another $1500 per year. Now, we are down to $5460 per year in profit. My tenant basically paid ALL my expenses ($14,340 per year) and I must pay taxes on $5460. I guess I can afford that! They are paying for EVERYTHING…and I, as the owner, get the benefits. What if it goes up another 15K next year? That would be $15,000 MORE profit….thanks to my tenants. Now, keep in mind that I purchased this property and was “all in” for about 85K cash. Currently, the property is worth about $145,000. I have 85K in it. Where and when do I pay the taxes on the $50,000 I made by buying under market? You have two options: pay the taxes when you sell it (at a reduced rate), or take advantage of Uncles Sam’s 1031 exchange program and pay ZERO taxes upon sale. All things considered, there is NO OTHER INVESTMENT that Uncle Sam treats like this. If you buy a rental property in Florida and must travel here once a year to inspect it, you can even write off your airline tickets and rental car. If you stop and sight see one day on your way to Florida, Uncle Sam may even be graceful enough to allow that.
Here is a picture of the house described above. It was purchased in 2014.
At current rates, this house gained almost 15K this year in appreciation. It goes up, Uncle Sam tells me I get to claim it went down (depreciation), my tenants are in partners with me (they pay for it and I get to keep 100% of it), and I don’t have to pay taxes on all of the profit. I played Monopoly as a kid. This is Monopoly in real life! You get to play with real money, REAL estate, and have the opportunity to provide a financial future for you and your family that, done properly, is sustainable REAL wealth!
Work a job and make 30K, 50K, 100K a year. When you quit working, your income goes away. Real estate will provide continuous sustainable income each and every year and without putting in 40 hours each and every week. And don’t forget that you favorite uncle, Uncle Sam, WANTS YOU TO buy and invest in real estate. Thanks Uncle!
DON’T PAY TAXES!
Want to know how…legally…morally…and with the IRS blessing?
Visit my website www.capehomebuyers.com and click on the page DON’T PAY TAXES
If you are considering buying now for a future home, buying now for investment income, or simply having a second home feel free to contact me. It will be my pleasure to help you find the right home or condominium to meet your needs. And remember, Florida is a NFA friendly state. You can have your Uzi and investment property too:)
John L Thedford