Tag: investing

Conference Call: Top 10 Planning Considerations for Real Estate Investors

May 31, 2019 - Conference Call

For years, real estate has been in the doldrums following The Great Recession, but this is beginning to change. McManus & Associates Founding Principal John O. McManus today discussed considerations for real estate investors, from basic to sophisticated, during a conference call with clients. Below, press play to listen to the call recording and read about the 10 issues covered during the discussion:

 

  1. How can landlords solve for concerns regarding liability and mitigate risk pertaining to investment properties? All real estate investors must consider a Limited Liability Company and Umbrella Insurance, which are cost-effective solutions to provide peace of mind and protect personal wealth in the event of litigation in connection with a property.
  2. What is cost segregation and how can it aid in minimizing income taxes? Owners and developers of real estate acquisitions made within the past decade may consider an analysis to understand the benefits of accelerated depreciation and greater tax deductions.
  3. What are the advantages of being characterized as a real estate professional? Investing sufficient time in the management of your properties allows property owners to offset income with rental losses and to avoid net investment income tax of 3.8% on rental income.
  4. What are the benefits of a 1031 exchange and what steps must be followed to implement? This common strategy for the deferral of capital gains requires a particular procedure to be followed in order to have the desired tax result.
  5. What is a monetized installment sale and why might it be preferable to a 1031 exchange? The participation of a third party intermediary can both defer capital gains to be paid in increments over a 30-year period and allow for a step-up in basis when the sale proceeds are deployed into the next real estate acquisition.
  6. What do we know about Opportunity Zone Funds? Uncertainty still surrounds the implementation of the recent Tax Code changes, but sophisticated real estate investors may find these partnerships to be appropriate vehicles for deferring and writing off capital gains.
  7. What are the advantages of using a Family Limited Partnership as a real estate holding company? Family Limited Partnerships are multi-purpose entities which can consolidate management of real estate investments, enhance liability protections, and facilitate wealth transfers to the next generation.
  8. What is a step up in basis and how does it impact the decision to gift real estate? Resetting the basis of a property based on a date of death value provides valuable advantages for loved ones who may continue to hold the investment or who decide to sell; however, gifting a depreciated property during lifetime can sacrifice this benefit.
  9. What is the alternative to gifting a low basis property? Use a depreciated property as leverage to secure financing which can provide liquidity to fund a transfer of wealth, while also allowing an investor to preserve the step-up in basis by holding the property until death.
  10. Why is life insurance an essential planning consideration for real estate investors? Life insurance can be a tax-free tool to provide readily available cash to pay for estate taxes, fund a cross-purchase agreement, or facilitate property acquisitions between family members.

Real Daily Relays Insight from McManus on Self-Directed IRAs

August 9, 2018 - Media Clips

 

Real Daily, which seeks to enrich, enlighten and empower readers to make informed choices that will positively impact their financial lives, recently published the article, “5 Reasons You Need a Self-Directed IRA.” The piece, which cites insight from McManus & Associates Founding Principal John O. McManus, begins with an overview:

·           Self-directed retirement accounts, known as a self-directed individual retirement arrangement (IRA), were created in 1999 by an act of Congress after intensive lobbying of small business owners and associations.

·           The beauty of a self-directed IRA is it allows you to invest up to $6,500 into a tax-deferred account where you control the investments. Many of those investments include alternative vehicles not available in a traditional IRA.

·           These alternative investments include real estate, private mortgages, private company stock, oil and gas limited partnerships, precious metals, horses, and intellectual property.

The first reason why one should consider opening a self-directed IRA is higher returns. Per the article, “The number one reason investors use self-directed IRA accounts is the ability to pursue much higher returns compared to stocks and bonds. If you make a 25% return on a real estate investment and are able to build on that profit cumulatively for 10, 30, or 30 years it can be life-changing.” The story goes on to quote McManus:

“If you understand investments, particularly in certain segments, you can take advantage of higher yields and maybe less volatility,” John O. McManus of the estate-planning firm McManus & Associates in New York and New Providence, New Jersey told NerdWallet.

McManus has invested in real estate and other assets through a self-directed IRA for about 15 years, he says.

A self-directed IRA also lets McManus invest in companies that aren’t publicly traded, which “a mutual fund will not allow you to do,” he says. But, he warns, “this is not a game for the unsophisticated.”

The following four reasons to consider a self-directed IRA include:

·       Better diversification

·       Investing in private equity

·       Putting assets to work

·       Investing in cryptocurrencies

Click here to read the full article, including more information about the five arguments in favor of a self-directed IRA, as well as the risks of self-directed IRAs.

To discuss your investment strategy as it relates to your wealth management plan, call McManus & Associates at 908-898-0100.

McManus Weighs in on Self-Directed IRAs for NerdWallet

August 25, 2017 - Media Clips

Andrea Coombes, whose stories on retirement, investing, taxes and other topics have appeared in the Wall Street Journal, MarketWatch, San Francisco Chronicle and other outlets, recently wrote an article on an investing strategy for the bold-hearted. Her piece, “Self-Directed IRAs: An Option for Expert Investors,” sheds light on the benefits and risks of self-directed IRAs.

Coombes spoke with McManus & Associated Founding Principal John O. McManus for his take. From the story:

The two main reasons investors take on the risks of self-directed IRAs are higher expected returns and the opportunity for diversification.

“If you understand investments, particularly in certain segments, you can take advantage of higher yields and maybe less volatility,” says John O. McManus, who has invested in real estate and other assets through a self-directed IRA for about 15 years. McManus founded the estate-planning firm McManus & Associates in New York and New Providence, New Jersey.

His self-directed IRA also lets McManus invest in companies that aren’t publicly traded, which “a mutual fund will not allow you to do,” he says. But, he warns, “This is not a game for the unsophisticated.”

Head over to NerdWallet to learn more about the advantages and drawbacks of self-directed IRAs. For guidance on your overall wealth management strategy, contact McManus & Associates at 908-898-0100.

Bankrate Relays Investment Ideas from McManus in Feature Slideshow

May 3, 2016 - Media Clips

bankrate logoBankrate, which has more than 2.75 million readers, recently turned to McManus & Associates Founding Principal John O. McManus for advice on investments and IRAs. His thoughts are included in the publication’s feature slideshow, “Traditional or Roth IRA: Find out which IRA is better-suited for high-return investments.” From the slideshow:

Pay upfront, watch Roth explode later

Do you benefit from having an extra-long time horizon? Then going full throttle in the Roth IRA is apropos, says John O. McManus, founding principal of McManus & Associates in New York City.

“If you can take a long-term view, opt for a Roth IRA and take an aggressive approach with asset allocation and investing,” he says. “Roth IRAs buy you a lot more time to allow the market to recover, absent the mandatory distributions of traditional IRAs. Create a self-directed Roth IRA and pour significant capital in it to build horsepower. Then smartly pursue alternative investments to generate the biggest returns,” he says.

“Private equity and real estate are the 2 best areas where real leverage can be achieved with a Roth IRA. The idea is to pay your taxes up front, then really watch returns from your investments explode.”

Many Millionaires Are Down on the Stock Market – Should You Be?

February 15, 2016 - Guidance

Last Friday, Brian O’Connell penned a piece for TheStreet on what millionaires being down on the stock market means for regular investors. Here are thoughts from John O. McManus, founding principal of McManus & Associates:

With the wealthy keeping a tight rein on their dollars, the market remains flat to down. Because millionaires feel poorer, they’re spending less on creature comforts, which can cause the economy to slow. We saw this in the Great Recession – fewer vacations and pricey dinners, less frequently cut lawns and cleaned pools, and fewer wallets opened for cars, high-end fashion, jewelry and more. When millionaires are soured on the market, regular investors should view this as a red flag, because the rich tend to spend the most on guidance from top-notch advisors and can afford to be patient and invest for the long-haul. If millionaires are pulling out of the market or not investing, there’s no reason regular investors should do the opposite. That said, many millionaires may still be invested in the market, because they can afford to take a long view.

The Art of Gifting: Top 10 Issues with Owning and Gifting Artwork

August 10, 2015 - Conference Call

Owning artwork is not only a cultural indulgence, but the sophisticated (and the lucky) possess artwork as an investment that can provide a handsome return. Auction houses, most recently Christie’s, have seen record-setting bids as fine art wrestles to take its position as an asset class equal to equities, commodities, and other hard assets. In light of the increase in capital gains tax combined with the collector’s desire to reduce the imposition of income tax and estate tax, the field is ripe for sophisticated planning.

As part of it Educational Conference Call series, John O. McManus this month discussed strategies to addresses the hard and soft issues surrounding the ownership and transfer of art. We invite you to listen to the recording to find detailed information on the Top 10 issues with owning and gifting artwork that follows, whether you’re an artist, dealer, investor or collector.

LISTEN HERE: “Top 10 Issues with Owning and Gifting Artwork”

New Jersey Law Journal Features Article by McManus in Special Supplement on “Wealth Management”

August 2, 2014 - Media Clips

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On July 28th, New Jersey Law Journal published a special supplement on “Wealth Management.” The featured section includes a co-authored guest article from McManus & Associates Founding Principal John O. McManus and Mark Cortazzo, senior partner at MACRO Consulting Group. The piece, titled “How Estate Planning Can Unintentionally Wreck a Retirement Plan,” outlines steps that can be taken to protect clients when complex investment vehicles like variable annuities are involved in the estate planning process.

WSJ’s MarketWatch Features Advice from McManus on “How women can make estate planning easier”

May 8, 2014 - Media Clips

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Andrea Coombes

Andrea Coombes

Andrea Coombes writes the “Ways and Means” column for MarketWatch, a media property of the Wall Street Journal that has nearly 9.5 million unique visitors per month. McManus & Associates Founding Principal and top AV-rated Attorney John McManus recently spoke with Coombes about special considerations for women when it comes to estate planning.