Tax refund season is coming up fast. Many might fear this time of year if they haven’t made the effort to incorporate a savvy tax plan, and some won’t get anything back. Others will receive thousands in tax refund dollars from the IRS. However, what you do with those dollars may not just make a huge difference for the rest of the year, but for the rest of your life.
Real estate is still at the forefront of most people’s minds. It is considered by many to be the best investment opportunity of the moment. Few want to wait until interest rates and property prices go up to get in or expand their portfolios. So why not use your tax refund to get started now?
Of course, most people’s tax refunds aren’t going to afford millions of acres or a South Beach penthouse. So what are the best possible options for using this cash to invest in real estate?
Let’s take a look at 6 choices:
1. Real Estate Investing Education
Investing in your real estate education is one of the sure-fire ways to see your tax refund put to good use. Whether you are brand new to real estate or have a 100 property rental portfolio, education is still a smart move. No matter what way the market goes, you’ll never lose it. Education, in and of itself, is an investment. The more you put into it, the more you will get out of it.
2. Minimizing Next Year’s Tax Burden
It might sound odd, but for some, one of the most profitable moves with your tax refund could simply be minimizing what you’ll owe the IRS next year. Many individuals leave thousands of dollars on the table or sacrifice double digit investment returns. Putting out a little more for a better accountant, registering a LLC to invest under, or even starting a self-directed IRA could be a great move.
3. Start Wholesaling Houses
Wholesaling homes can be be done with very little to nothing down. This alone could make it a top choice for those getting little back from the IRS. With this particular exit strategy, the little money they gt back can go a long way.
4. Buy a Home
For those that don’t even own their own home, a good tax return may be the best way to get started. While there are many debates over whether a primary residence is really investing, it is without a doubt the number one source of wealth building for a huge percentage of the population.
5. Buy a Rental Property
Buying a rental property in the current market could be one of the best financial decisions many will make in their lifetimes. With a tax refund check? Yes, there are certainly still dirt cheap foreclosure deals in some parts of the United States. Others can use their refund as a down payment and finance the rest. A rental property could keep on growing in value and throwing off income every month for years.
6. Save it
This may be the last suggestion anyone expected to hear, but the truth is that saving money is essential to a real estate business, particularly those in the buy-and-hold industry. It is always important to have reserve funds for a rainy day. Keep in mind, there are still ways to do zero down real estate deals as well as ways to use other people’s money to invest, while shoring up your own solvency.