Keeping ROIs high and taxes low

Marc Dupuis has a firm grasp of real estate investment—so much, in fact, that Simple Acquisitions, the company he founded with his girlfriend, creatively brings together accredited investors.

Specializing in syndication, Simple Acquisitions  assembles the right blend of right real estate professionals and insiders whose wealth of knowledge comprises finding and acquiring the right properties, then managing and selling them. Simple Acquisitions thinks big and takes on larger projects, but investors usually only proffer smaller, more affordable monies. It’s what Dupuis refers to as passive investing.

Dupuis also relishes economies of scale, because properties endowed with more units are cost effective. Moreover, funds for the low-risk, income-generating properties are handled by an attorney. But arguably the biggest benefit of syndication comes in the form of tax savings because investors are limited partners, which helps bypass corporate double taxes. By claiming depreciation and loan interest deductions, cash flow becomes insulated from taxation.

Dupuis added that he only chooses markets that have unrelenting demand for rental accommodations.

“We bring in partners to bring in equity, and we start a new company and give partners 50% ownership of the property, but we do all the leg work,” said Dupuis. “We put the property manager in place. We decide everything to push values up.”

Simple Acquisitions only handles one transaction at a time because Dupuis says keeping things simple and diminishing risk are paramount. So is transparency.

“We share everything with our partners so that they know what’s going on,” he said. “We know a lot of other companies don’t do that. They just ask if you want in on this deal and that’s it, but we try to make sure people really understand what’s going on because they’re partners. They own 50% of everything we make. I don’t want to make decisions unless they know what’s going on, and I want them to know that I have their best interests at heart.”

At this year’s Investor Forum, Dupuis will give a speech about real estate investment syndication and it’s many benefits, like tax-free investing.

“A lot of people don’t know this, but you can depreciate your property to shelter your income,” said Dupuis. “We get cash flow in properties, and the way we do it tax-free is we get the depreciation. Let’s say you bought a property for a million bucks and you’ve got $50,000 worth of income, usually there’s enough depreciation that you can use the extra depreciation against your income. The depreciation shelters all the taxes from the income you made on your building, but the extra depreciation can shelter your taxable income at work.”

Another method Simple Acquisitions uses in its American real estate investments is the 10/31 exchange, named after Section 1031 of the tax code, which helps investors avoid capital gains and depreciation recapture taxes.

“When I was new with my portfolio, I was young and didn’t know what I was doing,” said Dupuis. “I was buying stuff, fixing it up and flipping it, but then I realized after my tax bills that I’m spending a lot on taxes.”

Yet, as a veteran investor, Dupuis has learned all the tricks of the trade and he’ll share them at the Investor Forum on April 7.

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