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Invest in Real Estate

Investing in real estate takes financial success to the next level. Learn about the benefits here, and reach out for your custom investment plan

Our team of expert agents are ready to start creating a personalized investing strategy, based on your specific financial resources, needs, and goals. While you're hard at work, our agents and administrators are focused on accomplishing your real estate dreams. 

With many benefits of investing in real estate, our clients gain access to top tier technology to analyze the current market, combined with data and information only available to our team with Compass RE. Read on to learn about our team's years of experience working with medical doctor investors, including testimonials from some of our investors, quantitative examples of the potential financial benefits of investing in real estate, and book your free consultation today.

Cash flow

Profit being brought in each month by collecting all income, paying all operating expenses, and setting aside cash reserves for future repairs, creating an additional stream of income


In high-demand markets, investing for appreciation involves buying a property that is predicted to increase in value over time, and holding onto it

Leverage paying
back loans

Leverage uses borrowed capital/debt to increase the potential return of an investment as the real estate values rise, commonly with your own money or through a mortgage

Real estate as a tax shelter

Investing in real estate can be used as a path to building wealth, due to its generous tax benefits, legally storing financial assets so that current or future tax liabilities are minimized

Our team has years of experience helping medical doctors invest in real estate 

"As a real estate investor I have often read that you need to build a good team which needs to include a good banker, contractor, insurance broker, accountant, lawyer and real estate agent. (Affinity agents) and the Affinity Team, have been pivotal in my growth. I get insights and recommendations when it comes to deciding what is marketable in a flip or what is a desirable rental neighborhood or even a target price going into a flip so I can accurately assess my costs, I trust them completely. They have sold 4 flips in a matter of days on the market and have helped me find and close on over 6 rental properties. They are quick, knowledgeable and honest. Thanks guys and cheers to more deals!"      -  A. S. 


Tax Aspects of Real Estate Investments

Entity Structure - 

  • Options – LLC, GP, LP, INC, trust, unincorporated

  • Tax treatment is different than legal entity type

  • LLC’s can be taxed as disregarded entity, Partnership (1065),  S Corp (1120S), and C Corp (1120)

  • Real estate is typically held in an entity taxed as a partnership

  • Balancing conflicting tax/legal benefits with financing requirements

  • Owned Individually – no liability protection, not recommended for commercial. Can qualify for residential financing rates

  • LLC Disregarded Entity – no separate filing requirement, good for 3 or less properties

  • Partnership (LLC or LP) – separate filing requirement can provide clarity for financial covenants and can reduce audit odds

  • S Corp – Never recommend because of loss limitations and distribution issues

  • C Corp – Never recommend because of double taxation and no preferential capital gain rates

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Financing & Return on Investment - 

  • Banks do not favor LLC’s on residential investments, commercial loans no issue

  • Financing can leverage your investment to increase your rate of return. May increase suspended losses & increase investment risk

  • Need to evaluate both cash flow and total after tax ROI


Loss Limitations 1 - 

  • Previous example does not account for potential passive loss limitations

  • Rental losses are passive and can only be offset by passive income. 

  • Exceptions

    • Active Participation

    • Real Estate Professional

  • Losses carried forward and released on disposition.  

  • Active Participation

    • $25,000 loss cap, phased out MAGI over 150,000

  • Real Estate Professional 

    • ½ of total work time and more than 750 hrs

    • Each property separate activity unless grouping election made

    • Binding election for future years

Repairs and Improvements - 

  • Repairs expensed in current year, Improvements capitalized and subject to depreciation rules

  • Depreciated property subject to recapture rules – 25%

  • In general assets with life over 1 year are required to be capitalized. 

  • New Safe harbor rules (annual election required)

    • Expense improvements – lesser than 2% of unadjusted basis or $10,000

    • Unadjusted basis less than $1 million

Depreciation - 

  • Real Property

    • Residential 27.5 Years

    • Commercial 39 Years

    • Land – Not Depreciable 

  • Land Improvements 15 Years

  • Personal Property 5 Years

  • Leasehold Improvements 15 Years

  • Component Depreciation (Cost Seg)

  • Recapture is 25% regardless of the tax bracket when deduction is taken 

  • Bonus Depreciation

    • Qualified Improvements - 50% depreciation Yr1

    • Used equipment does not qualify

    • Real estate does not qualify only equipment and other personal property

  • 179 Expense Rules

    • 100% Expensing of qualified Improvements

    • $500,000 limit, phased out for purchases in excesses of $2 million 

    • Can only be taken to the extent of net income, remainder carried forward. 

    • Used equipment will qualify 

754 Elections - 

  • Complex tax election for entities taxes as partnerships

  • Can step up basis in partnership and/or assets of partnership upon death or liquidation of a partner

  • Always consult your tax advisor when there is a potential ownership change of the partnership (technical terminations)

1031 Exchanges - 

  • 1031 Exchange allows a taxpayer to replace a piece of real estate with a different property and defer all built in gain

  • In order to avoid 100% of the gain the replacement property must be of equal or greater value

  • Intermediary required

  • Upon the sale of your building you must identify acquisition property within 45 days and actually settle on the property within 180 days of the original sale

  • Title to the replacement property must be exactly the same as the relinquished property

  • Issues if only one partner wants a 1031. Partnership must liquidate prior to 1031 transaction.  

  • Very common on fully depreciated property.  

  • There are reverse 1031 exchanges were you acquire the relinquish property first

Accounting Recommendations - 

  • Class accounting to track income & expense per rental unit

  • Helps to evaluate under producing real estate

  • Allows for easy tax reporting if properties are located in different taxing jurisdictions.  

  • Allocate overhead to properties prorata

  • Quickbooks or equivalent dual entry accounting system or property management software.  No Excel for 3 units or more

Information gathered from a presentation by: Tom Weiss, CPA, The Weiss Group

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