Hello everyone, my name is Jack. I currently own one single family rental property, but I started a business last year and we are currently projected to produce just over 7 million EBITA next year. I plan on selling the company once we reach a 100m dollar EV some point within the next 3-5 years. After that point I want to go all in on real estate and become classified as a real estate professional by the IRS, and I’m wondering if anyone has advice on where I should be buying multi family homes/ apartments and what I should be looking for to ensure I receive the maximum return possible/ hedge against my massive tax bill that will follow the sale of my company. Any advice would be appreciated. I’m really just speaking in hypotheticals right now trying to come up with a plan for what I should do after all is said and done!
What is your goal, are you looking for the cash-flow to maintain your living style?
Building a company such as this is not an easy task and likely took a lot of energy and time away from friends / family(making an assumption, I hope I am wrong). If you really did spend a lot of time, I would focus on spending as much time enjoying the hardwork that you did.
I would look to be as passive as possible in the real estate that you get into. You will likely have nice investment income regardless if your return is 8% or 4%.
My suggestion is to invest in a market that you are familiar with - Think of an area that you live in, grew up in, vacation often or visit friends / family.
Hi @Jack Stalnaker nice to meet you here on BP! Congrats on the growth of your business, and it’s great that you’re already thinking about how to plan for life after a major liquidity event. Becoming a real estate professional can be a smart move, especially when you're facing a large tax bill. It allows you to actively participate in real estate and potentially use depreciation to offset active income, which could be a major advantage post-sale.
When it comes to markets, you’ll want to look for areas with strong population and job growth, landlord-friendly laws, and housing demand that outpaces supply. Sun Belt cities like Dallas, Tampa, and Charlotte have been popular for these reasons, but don’t overlook emerging secondary markets that are seeing steady in-migration and development.
As for what to look for in properties, focus on cash-flowing assets with value-add potential—where you can increase NOI through renovations, better management, or repositioning. Pay close attention to cap rate trends, expense ratios, and how interest rate shifts may impact your financing options and returns. You might also explore bonus depreciation while it's still available, especially if timing aligns with your sale.
It’s wise to start building relationships with operators, brokers, and tax advisors now, even if you're still a few years out. That way, once you’re ready, you’ll already have a strong network and a clear sense of your strategy.
Since you’re preparing for a significant liquidity event, you might also want to explore co-investing with experienced operators to diversify and access institutional-quality deals without having to manage everything yourself. That’s actually the model I’m working with now, and it’s been effective for many investors in similar situations.
Starting to build your network and understanding tax strategies now will put you in a strong position when you’re ready to move. If you want, I’d be happy to share more about what I’m doing or help you get started.
Hello everyone, my name is Jack. I currently own one single family rental property, but I
Depending on what kind of business you have you should probably talk to a 1031 intermediary and a CPA NOW to determine how you can roll profits from business #1 into the new future business with minimal taxes. How you structure the sale may matter. For example breaking out the real estate seperately if you have any from the operating business.
REP is easy but it is not. Check with your CPA and review the requirements. There are a lot of people who want REP, but I think relatively few qualify unless you are spending a lot of time actively managing your properties. If you are passive investor or not spending enough time, or working another job, it might be tough to prove/qualify.
There's a lot here that you'd want to discuss with a CPA.
On the real estate end, you should do some research on the different types of asset classes within real estate. Are you looking to be active or would you want to be passive? What markets would you want to get in? Ultimately, it depends on your goals.
There's a lot of hoops to jump through with being a real estate professional that may be onerous. You could consider short term rentals if you're looking to reduce your tax burden. However, you need to make sure that the short term rentals is a good investment for you and aligns with your goals.
As for the sale, you may want to consider an installment sale for your business or rolling over equity into the new company. You'd want to get a transaction advisor and a CPA that understands the ins and outs of M&A and real estate.
What is your goal, are you looking for the cash-flow to maintain your living style?
Building a company such as this is not an easy task and likely took a lot of energy and time away from friends / family(making an assumption, I hope I am wrong). If you really did spend a lot of time, I would focus on spending as much time enjoying the hardwork that you did.
I would look to be as passive as possible in the real estate that you get into. You will likely have nice investment income regardless if your return is 8% or 4%.
My suggestion is to invest in a market that you are familiar with - Think of an area that you live in, grew up in, vacation often or visit friends / family.
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