Example of How You Can Use an SBLOC to Invest in Real Estate
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- čas přidán 31. 05. 2024
- Watch this video to see a practical example of how you can use an SBLOC to borrow against your stock portfolio and invest in a secondary asset like real estate. SBLOCs are a great strategy used by wealthy investors to maximize returns by double investing the same money.
Intro to SBLOCs ▶️ • Intro to SBLOCs
Video Contents
00:00 - Intro
02:25 - Example with 40% SBLOC to Buy Real Estate
06:01 - Year 1 Growth with SBLOC
10:39 - Year 2 Growth with SBLOC
⚠️ Exercise caution before using this strategy. Do your own research and make sure you fully understand the risks you are undertaking!
💡 I do not work with clients or offer any consulting services. If you want to learn more about the best tax and investment strategies, subscribe to my channel and check out these courses ▶️ sharonwinsmith.com/courses/
The information provided in this video is owned by Winsmith Tax LLC and is solely for informational and educational purposes. It is not intended as investment, legal, or financial advice. Always consult with a professional familiar with your unique situation, or conduct your own research before making any decisions. We might receive commissions for recommending certain products or services.
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Great video, Sharon.
You simplify SBLOCs so well. Really enjoy these videos.
Please keep the videos coming I'm learning extremely 🙏 alot from your channel...more advice on investments that aren't utilized more often. Most utubers are pushing out the same shampoo information..your channel showes tactics that are new to me. Thank you
Thank you so much! I don't think the vast majority of people, especially in the financial space, even know about these concepts. They certainly don't teach these concepts anywhere I've ever seen.
Top of the morning coach happy mother's day 💐
Thank you! 😁
When you work on something that only has the capacity to make you 5 dollars, it does not matter how much harder you work - the most you will make is 5 dollars.❤
People dont understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments dont match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.
Sounds interesting. I was planning to invest some few £ in some coins, stack them up and leave them for a few years, but seeing this changed my mindset. Thank you very much
Was waiting for a video ❤
Another great video Sharon!
Great video!
I love your strategy.
I have two rentals.. debt free, i pay tax on the income( passive). I apparently am not smartly. I watch a bit on what you said to mortgage them up... can you expand on this for us beginners?
I second this.
She's saying you shouldn't hold onto investment properties beyond their depreciation schedule.
Churn, burn and then turn via 1031 exchange.
Of course your estate will get hit with a massive estate tax so you will have to put a lot of assets into irrevocable trusts, but those trusts can technically continue to operate as a business and keep doing the same thing after you're gone and distribute profits to your heirs over time.
It might be worth checking out this video on why you shouldn't be paying tax on real estate investments ▶️ czcams.com/video/1eukzvgBAG4/video.html
Can you continuously keep borrowing as your portfolio increases over time or is it just one time. It would be great if you could please compare SBLOC from IBKR vs Charles Swab
Yes - you can keep taking more SLBOCs up to 50% of your portfolio value (though I would never borrow up to the max). One of the great things about an SBLOC is that you can increase it over time as your portfolio increases. With respect to IBKR vs. Schwab - you just want to shop around for the lowest interest rate and that is never going to be at Schwab. Most people use IBKR because they have some of the lowest rates. I don't think many people would ever have their brokerage accounts at IBKR unless they were using an SBLOC. I think of it as the SBLOC bank.
@@sharonwinsmith So, in essence, if no portfolio at IBKR a person would need to transfer a portfolio (or amount in kind that's needed from a portfolio for the loan amount desired) from one of the usual brokers to IBKR to take advantage of the lower rates. Do I have that right?
Hi Sharon, do you have a video on tax lien investing? Just curious if that’s a worthwhile endeavor.
I don't have any videos on it yet. The only way I have ever invested in tax liens was through a fund. I think in theory, it is a decent investment option if you can find high enough rates that compensate for the negative tax consequences. However, in my experience, it is hard to do this well in practice. I find you are competing with big fish in this space who come in and snatch up the good liens in bulk. And practically speaking, it's hard to compete against them or get access over them. The best book I've read on tax lien investing is The 16% Solution by Joel Moskowitz.
If you use your SBLOC as a down payment for physical real estate, you dont get to write off the margin interest, right?
As far as I know you get to write off the interest as it is used for a further investment. So yes. You can write it off.
@MyWillbot I'm not so sure. I hope she sees my comment.
The interest on the SBLOC is tax deductible if you are using the SBLOC funds for investment purposes or to fund a business. So, if you take an SBLOC to purchase real estate investment properties, yes the SBLOC interest is tax deductible.
Interesting ideas, thank you. Could you buy a rental property using only SBLOC without taking a mortgage?
How are payments with SBLOC made?
Would it be like a normal mortgage payment each month?
I was wondering the same thing. If the appreciation of your collateralized portfolio can pay off the loan, then that would be ideal. If not, then you’ll probably have to use this example here and pay with rental income or it looks like you can use dividend income as well. At the end of the day, this strategy is mainly used to avoid taxes. I’d love to see a real answer from Sharon.
You can leave the SBLOC balance outstanding indefinitely or pay it off with other sources of income if preferred. Most using this strategy just leave the SBLOC principal balance outstanding.
@@sharonwinsmith - thanks Sharon. This is really useful to know.
Thanks for the awesome content, is the interest accrual daily tax deductible? Thanks in advance.
Yes - the interest on the SBLOC is tax deductible if you are using the funds from the SBLOC for investment purposes or to fund a business.
How does the scenario look to you if the SBLOC was invested in the same original fund? Maybe VOO?
Hi Sharon, Thank you for all the great information. What are your thoughts on using a HELOC to fund an account? From what I've seen comparatively, the interest tends to be lower than borrowing on margin.
However, I know there are people who are adamantly against this type of funding for the market.
I personally focus on ETFs and index funds when I invest.
Oh yes Happy mothers day too
How timely! Great video, again! I trying to understand not paying taxes on the passive rental income aspect. Would it be because the person with the SBLOC is also satisfying the real estate work hour requirement for the IRS?
It might be worth checking out this video on why you shouldn't be paying tax on real estate investments ▶️ czcams.com/video/1eukzvgBAG4/video.html
@@sharonwinsmith Will do and I appreciate the response.
I need a good CFP to bounce my ideas off of.
Can you recommend some good Tax Attorneys who are good at the Buy, Borrow, Die strategy on Long Island?
I'm afraid you won't find any tax attorneys who work with clients and understand this strategy. This isn't the kind of stuff most practicing attorneys or CPAs really understand or even know about.
I do this all the time. Dont tell them our secret 🤫
haha I don't believe in conspiracies but I have to really wonder why nobody talks about these strategies. 😂
Where should I be living when I'm renting out the real estate?
The real estate is an investment property, not a home you live in.
Nice hair