Lido Insights

2 June 2021

Investment Planning Considerations: Real Estate

By Jason Ozur, CPA*, Chief Executive Officer

The below are factors to consider if you plan to invest in the real estate market:

How And When Should Real Estate Be A Part Of Your Investment Plan?

Real Estate offers several advantages including: participating in a direct investment, diversifying in another asset class beyond stocks and bonds, income, leverage and potential tax benefits.  Right now, we’re in an exceedingly low interest rate environment. Used appropriately, leverage can offer the ability to increase your investment amount by using debt.  When the cost of debt is low and the belief is the return on the investment will exceed debt costs, prudent leverage can be sought to enhance returns. 

Currently we are in an exceedingly low interest rate environment.   When quality bonds are often yielding only below 2%, real estate provides another source of income.  Income that is often shielded from taxation with depreciation.

Generational Assets

Real Estate is a generational asset.   Investing and holding real estate can offer several advantages such as the ability of owning a hard, tangible asset as well as potential tax advantages such as the step-up basis rule.  In other words, the cost basis of the holding is reset to the current value upon inheritance. Although there is talk of changing this rule, the multi-generational aspect may still be advantageous with people using low-cost leverage to maintain an asset.

Alternative Real Estate Investments

Lido Advisors offers clients different types of opportunities within the real estate sector. In the more conservative side of that space, Lido invests in first mortgages targeting a 60%-65% loan to value.  We look at this as a loan to own strategy. We receive payment of 7-8% of while the debt is unpaid and if the borrower does not pay, the recourse is to foreclose and take the property.

On the equity side of real estate, Lido brings value to clients via multi-family, industrial, retail and ground-up construction opportunities. To learn more, contact an advisor.

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