THE SECOND INSTALLMENT OF A LESSON ON APARTMENT BUILDINGS...

A way to Survive!!!

Why Apartment Buildings should be in your financial plan!!!

Then, after the market turns around and there is real appreciation you should sell the houses and buy one multifamily apartment building.  Your ratio of land to units goes down and it turns out to be cheaper to have one apartment building instead of three or four houses.  Management is also easier as all the units are in one place and are not miles apart.  Either you or a management company can manage the property, keep the rents up and take care of the maintenance that is needed.

Here is the point where I can go into a discussion of the tax law and Section 1031 exchanges but I will save that for another blog.  By the way, I am probably the only realtor in the State of California with over fifty years as a practicing Certified Public Accountant.  An asset that can help you with tax planning and maximizing your profits and reduce your taxes.  And I work with a team of estate planners who can show how to pass the assets in your estate through to your heirs with a great tax benefit.

But let’s get back to protecting our assets and growing our estate.  I read an article recently that said that the better off middle class are renting luxury apartments.  Why you ask.  With housing prices where they are and interest rates rising even the well to do, those earning about $150,000 per year cannot qualify for mortgages and the payments on the house.  And you have to add property taxes that, in Los Angeles County, start at 1.25% and go up from there.  Then, in newer developments, there is Mello Roos.  This is like an additional tax to pay the cities back for the streets, sewers and other infrastructure.  They add it on to your real estate taxes and it is NOT deductible on your tax return.  That might bring your tax rate to about 2% per year.