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The 10-year yield did move up slightly over the last week.  However, it remains in the same trading range since the end of May.

Tax Strategies and Investments (Married at the Hip)

Many of you know that I have some background in investment advising.  I was at a couple of meetings this past week that had me reflecting on this week’s topic.  The first meeting had me speaking to Residential Realtors on spotting opportunities in the commercial side of the business.  The second meeting was presented by a wealth advisor on tax strategies.

I will attempt to tie my thoughts together here.  I am a huge supporter of a truly diversified investment portfolio.  As has been written here in the past, many are either real estate centric or stock market centric.  Each of those have their own innate risks.  Note that financial advisors (AKA wealth planners, family offices, etc.) are usually on the stock market side.  The real estate side is more represented by real estate professionals or through generational experience.

So, we have real estate professionals, the clients themselves, and financial advisors all in the mix when it comes to diversification.  Wait, there’s more!  Now we get to add in CPAs (and others) that know how to utilize the tax code to minimize the taxable impact to the client.

Woohoo, that is great.  Finally, I can reduce my taxes legally!  Not so fast.  Yes, we know about a 1031 tax deferred exchange in real estate.  But now someone is saying if I invest in “X,” then I can take these unique write-offs against my capital gains (just an example).

I bring this up because our tax code did undergo a serious revision this year.  Remember, I am a big proponent of teams to protect a client’s interests.  Just because there are certain tax advantages to a program does not mean it is a great net investment for a client.  Do some research on the EB-5 program ( The program helps immigrants gain legal entry to the US.

Keeping it simple, these folks need to invest $1,000,000 into the US.  Forget whether you like this program or not.  Just know it exists.  However, many of these investments have not turned out well.

Here is why I brought that up.  In effect, the EB-5 program is a example of using what the rules allow.  Nevertheless, if I was involved in helping those immigrants, then I would want to find them safe investment alternatives with great track records.

Now we are getting to my concerns.  Taking advantage of what the tax code allows is fine.  Doing so in a vacuum does not protect the clients.  This goes right back to the team of professionals needed to really weigh the pros and cons of implementing any strategy.

In my ideal world, I want all the professionals involved to believe in doing what is best for the client.  That way they can respectfully debate the merits of the strategy and the associated investments together all for the benefit of the client.  This is not a simple approach.  It takes time, effort and patience.

Whether you are a professional associated with the real estate or investment markets, I suggest you build teams to better handle the financial interests of your clients.  You do not have to be perfect.  Just work with those that share your vision.  And, not all professionals have the ability to see the big picture.  So, build your teams to fit the vision.  Competency, values, and exceeding expectations are a good start as you work hard for your client’s financial success.

As always, I welcome your comments; and I am happy to work with you if this sounds like an approach that you wish to embrace.

Investments Opportunities for Purchase with Strong Cash Flow:

Back on the January 15th update, I wrote about “Creating Residential Listings Using Commercial Opportunities.”  Each week,  I am presenting some of those investment opportunities to better educate all on what is actually available.  Note that these are all Single Tenant Net Leased properties that have listed in about the last 10 days.  In addition, I assumed a 5.25% loan with 50% down.  This is just a small sample of what is actually available.

If you assume investors in the Bay Area are getting a cash flow of 3.5%, then you can see the potential improvement with these properties above.  This approach is great for the investors desiring increased cash flow, an opportunity to get out of daily property management, and/or taking the challenges of rent control off the table.  Should you wish to discuss any of these or others, then give me a call.

That’s it for this week.  As always, feel free to give me a call with any of your strategic financing needs.

Article of Interest:

NREI shared “Tax Laws Bite California’s Housing Market: Virginia Postrel.”



See the table below for approximate interest rates.
Type Rate Fixed Term
Apartments 4.385% – 4.810% 3 to 10 year (30 yr amortization)
Commercial 4.695% – 5.110% 3 to 10 year (25 yr amortization)
SBA Lending Call for Options Call for Options