What Is a Class A, B, or C Property?
Real estate investments come in many categories, including sectors like retail, office, healthcare, and hospitality, and asset class, including A, B, C, and even D. What determines a property’s class may include age, location, amenities, finishes, and rent.
What Are the Rules for 1031 Exchange Refinancing?
For many real estate investors, the main goal of completing a 1031 exchange is to swap the equity in one property for an asset of equal or greater value while deferring capital gains taxes generated from the sale of the relinquished property.
What Is a Charitable Remainder Trust and How Does it Work?
Trusts are often complex, and there are many types. Therefore, it's always a good idea to have expert assistance when establishing one, especially if the trust is irrevocable. According to the Business Dictionary, the definition of a trust is "a legal entity created by the trustor through which the trustee holds the right to manage the trustor's assets or property for the benefit of the beneficiary." The main types of trusts are living, testamentary, revocable, irrevocable, funded, and unfunded. Within each of those, there are further variations.
What Is After-Tax Cash Flow and How Do You Calculate It?
Real estate investing provides a number of tax advantages for investors. This is because not all expenses impact a real estate investment’s cash flow. An investor can show a loss on their investment but still have positive cash flow. That is the difference between pre-tax and after-tax cash flow. Let’s see how it works.
What Is Operational Risk in Real Estate?
We can define risk as potential uncertainty and/or financial loss when it comes to investment decisions or activities. Evaluating risk in real estate can be complex and investors must consider many unknowns which could potentially lower returns and value. A common risk that comes with real estate ownership is operational risk.
What Is Private Credit?
As a subset of alternative credit, private credit can also be referred to as private lending, direct lending, or non-bank lending. It can be described as an asset class where the debt is not issued or traded on the public markets. They can be comprised of potentially higher-yielding, illiquid investment opportunities ranging from senior secured debt with income-like characteristics to distressed debt with equity-like risk and returns.
What Is a Recourse Loan and How Does it Work?
Lending money involves significant amounts of risk on behalf of the lender. To help minimize risk, lenders typically set strict requirements to get the best interest rates on loans. However, lenders may go even further to reduce risk by offering recourse loans.
How to Set Up a Living Trust
A living trust is a tool that helps ensure that your heirs receive the assets that you want them to have. While they work similarly to a will, the big difference between a will and a living trust is found in the fact a will won’t go into effect until you have passed away, while a living trust (preferably a living revocable trust) goes into effect immediately. During your life, you are still in charge of your trust and the assets contained in it, and once you have passed away, the trustee whom you have designated becomes responsible for handling the assets in the trust according to your wishes.
How Much Do You Have to Reinvest in a 1031 Exchange?
Real estate investors not only focus on picking the right properties, but savvy investors may also understand how to use the current Tax Code to their benefit. Policymakers have put certain provisions in the existing Federal Tax Code that incentivize investors into not only making an initial investment, but also benefits associated with maintaining their position as an investor. One such example of an incentive is the 1031 exchange. Understanding how these exchanges work, what they are, and the laws that surround them can ensure that you’re in a position to potentially enjoy sustained success as a real estate investor.
