You are essentially a partner in the deal. You might be a smaller partner, a limited partner, and you’re not what’s called the general partner which are the people that are actually running the deal.
There’s something called depreciation when you buy a rental property. I’ve talked about it before, when you buy a rental property, the government basically states that the building itself and all of the things inside of it have a shelf life. Over time, they’re going to depreciate or devalue. You’re able to deduct that yearly or whatever it might be on your taxes.
Some people like to be those longer deals, so they don’t have to constantly look for new deals. But for some people, they know that their money is going to be tied up for that long, three, seven or 10 years. They don’t like that. They’d rather do some of these debt deals where they know that their money is going to be held only for six months, 12 months, or 18 months.
Should I be investing in these equity opportunities in retirement accounts, and as I mentioned, a lot of people like to do that with these debt opportunities, debt deals or debt funds because they don’t have to pay those capital gains taxes and can defer those and continue to turn those deals over and get tax-deferred gains.
I try to be smart about it. Again, most of the time I try to put the debt inside retirement accounts and leave the equity deals out. Sometimes I do invest in debt outside retirement accounts. I’m mixing and matching to ultimately try to get the cash flow that I desire on a monthly basis.