Real estate in Louisville is slow to rise and slow to fall. Many investors savor the slow moving trends in Louisville. While it’s exciting to ride the upswing in coastal markets like California, New York, and Florida, many investors like the smooth ride in Louisville. The appreciation is fairly consistent and predictable, and the cash flow can be downright amazing! Many metrics that investors use to gauge return, such as cash on cash return are much higher than other areas in the country. However, it is not without its risks. While three or four large companies provide a high percentage of the private jobs, a loss of one could be felt across the whole city and thus rental housing demands could fall proportionately.
Investing in the Real Estate Market
The first way investors are investing in real estate in Louisville as a safe haven is to buy median priced homes. They are pulling their money out of the stock market and investing in single family homes. This market is perceived to be stable and is usually completely unrelated to the stock market trends. Rental properties are a great way to make reliable, steady returns from investments. There is a huge audience in the market looking for rental properties. The single family home market provides more liquidity than multifamily and apartments and thus more safety typically to an investor.
Have you ever heard of a 1031 exchange? If you are not a CPA or play in the real estate world, you most likely haven’t. It is how many investors catapult their wealth in an exponential manner by delaying taxes year after year when exchanging up properties. While I can’t go on to explain all of the intricacies of the 1031 exchange, know that it is highly advantageous to real estate investors and is used across the country to delay taxes and sometimes avoid them altogether.
The third way investors are using real estate in Louisville as a safe haven is to take out tax-free loans against their property and keep real estate and exemptions that go along with it. Serious real estate investors can utilize multiple tax laws to never pay taxes or gain penalties on their real estate. You must be certain to follow all guidelines to stay in compliance. If you are not 100% familiar with the stipulations, feel free to give us a call.
Other tax-free or tax-deferred strategies may include investments in various accounts, including SDIRA’s (or Self Directed Individual Retirement Arrangements) where you can make contributions to funds to invest in real estate and not be taxed on the money invested. This investment strategy has restrictions. There are contribution limits per year and a restriction on who you can work with, buy for and sell to. IRAs are usually investments into the stock market, but SDIRA’s can be used for a wider variety of investments including residential property and multifamily properties that can be used as rental properties, commercial property, vacant land, and even foreign property! What a great way to set up for retirement.
Depending on your level of real estate investment experience and who your network of real estate professionals and investors are, you can network find the best strategies to work out ways you and your investments can get the most out of the various laws and options available to you to make the wisest decisions and use real estate in Louisville or KY in general as a safe haven. Anyone can take advantage of these strategies! If you do not have a large network yet, or even if you do, give FairSquare House Buyers a call today at 502-289-6166 to discuss your investments and ways other investors are using real estate in Louisville as a safe haven. We can help you figure out the best way to utilize investment strategies and leverage tax laws to your advantage. We can also help you find your next investment properties in Louisville to utilize these strategies.