Investing in NNN vs Passive New Development

This video compares investment in NNN commercial properties with passive investment in multifamily or mixed-use development projects.

A lot of well capitalized investors are drawn to investing in NNN commercial properties such as a Starbucks or CVS or Chick-Fil-A.

NNN properties such as these are attractive because they are often new or newer high quality assets leased to long term credit tenants, so income is stable, with periodic rent increases built in to the leases. They are more predictable investments and much easier to own than say, buying an older apartment building.

The tenant is responsible for all the maintenance and expenses, so NNN properties are pretty much hands-off investments that don’t require a lot of work to own.

These are often very stable Class A investment properties in great locations , but they aren’t really available to a lot of investors because they generally have price tags of anywhere from a couple million dollars to 5 or $10 million or more.

The trade off is that returns are fairly low with Cap rates of 4.5% to 7%, so investments like these are geared more towards preservation of capital with moderate income, rather than growth.

For well capitalized investors who are seeking growth with higher returns and have a bit higher risk tolerance, passive investment in Class A new construction multi-family or mixed use development projects can be a great alternative. Investing in new development projects with a professional development partner allows truly passive investment in new construction properties in great locations that offer much higher potential returns.

Why Passive Real Estate is Best For Most Investors!

This video explains how you can invest in the best real estate deals without signing your life away on a commercial loan, or becomimg a landlord.

Invest Retirement Funds in Real Estate!

Learn how you can easily invest retirement funds in real estate or other alternative investments!

Don’t Rely on Stock Funds for Retirement Income!

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I meet a lot of people who would like to invest in real estate, but say all of their funds are tied up in IRA’s or 401k’s.

Most people don’t realize that they can easily transfer an IRA or a 401(k) from a prior employer into a self-directed IRA account and then they’ll have complete control to invest in real estate or any number of other investments you choose.

When investments grow Tax Free it’s really a game changer for how quickly you’re going to compound your wealth.

If you’d like to find out more about how self-directed IRA’s work and see how you can start your own, my email is down below, just shoot me an e mail & I’ll send you a link with more information and contact info for the trust company that I use.

They can tell you all about how it works and get it set up for you in a matter of a couple of weeks.

roger@LD2development.com

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If you’re in a position where you need tax benefits to offset investment income, Cost Segregation + Bonus Depreciation give you a powerful 1 – 2 Punch of tax savings!

I’m talking about Bonus Depreciation which is a way real estate investors and developers can accelerate huge passive losses on their properties in their first year of operation!

It’s been an incredible benefit, but it  drops to 80% for 2023 and 60% for 2024. For perspective, it has been only 50% most of the prior 20 years.

The good news is that if you are an investor, you can still take advantage of 80% bonus depreciation right now by purchasing an income property that is put in service before the end of this year.

So Let me back up for a minute and explain how Bonus Depreciation works.

Most people are not aware that you have the option to use what’s called Cost Segregation to depreciate certain components of your property faster.

The way it works, you have a cost segregation study done by an engineering company that specializes in Cost Segregation.

They divide the value of your building components in to 4 buckets:

Land – No Depreciation

Structural Elements – 27.5 year depreciation

Personal Property – 5 years

Land Improvements – 10-15 years

Using 100% bonus depreciation you can take all the items that depreciate in less than 20 years, accelerate their depreciation and claim all of these passive losses in your first year of operation.

The personal property and land improvement items that qualify for accelerated bonus depreciation are commonly about 30% of the building value / cost.

In our example, with total improvements at $1,500,000, 30% = $450,000 in passive losses you can claim year one!!!

if you have substantial passive income from any investment source, this is going to give you huge tax savings.

Whatever you can’t use, you can roll it forward.

Also, if you or your spouse qualifies as a real estate professional, you can use it against any regular income.

There are some great opportunities to pick up qualifying properties right now.

These can be multi-family rentals or even a single family or other smaller rental property.

The Cost Segregation study itself can be done after the 1st of the year, but the property needs to be purchased and in service (ready for occupancy and offered for rent) before the end of the year.

The clock is ticking, but there are still some great opportunities available.

DM or call me to learn more.

roger@LD2development.com

312.380.9650

✅ Get New Book on Amazon: Don’t Buy Multi-Family! BUILD IT

https://www.amazon.com/gp/product/B09PSFMC6Z/

✅ Amazon Author Page: https://www.amazon.com/author/rogerluri _______________________

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