Are you a real estate investor wondering how to save money on taxes while building long-term wealth? In a recent conversation with Casey Chohan, a tax expert and founder of Together CFO, we uncovered valuable insights for navigating the complexities of taxes, protecting your assets, and leveraging tax-saving strategies. Here’s a breakdown of key takeaways that every real estate investor should know.
Understanding the Importance of Tax Structures
Many real estate investors start their journey by forming an LLC or an S-Corp, but as Casey explains, the right tax structure goes beyond basic setups. Tax strategies can get complex, especially when it comes to high-net-worth individuals. Casey highlights the importance of having a solid foundation in place that not only protects your assets but also reduces your tax burden.
“The tax code is written to incentivize certain activities, like investing in specific areas or purchasing assets,” says Casey. This is where strategies like cost segregation and opportunity zones come into play.
Opportunity Zones: A Powerful Tool
One of the most beneficial tax-saving tools for real estate investors is the Opportunity Zone. As Dwan Bent-Twyford shared about her own investment in an Opportunity Zone in downtown Clinton, Iowa, these zones offer significant tax breaks, including the ability to eliminate capital gains taxes after holding property for 10 years.
Opportunity Zones are government-designated areas that encourage investment and redevelopment. By investing in these zones, investors can access tax advantages, such as deferred capital gains taxes and even complete exemptions, provided they meet specific criteria. Casey explains that it’s crucial to understand these zones as they offer opportunities for long-term growth and tax relief.
Get Out of Your Own Way
Starting out in real estate can be overwhelming, with many investors bogged down by the administrative details—creating LLCs, building websites, and more. However, Casey emphasizes the importance of focusing on action over perfection.
“Get out of your own way,” Casey advises. Don’t let fear and hesitation stop you from moving forward. Whether you’re buying your first property or working on a major deal, the key to success is taking the first step and staying focused on your goals.
The Power of Having the Right Team
As Dwan points out, having a mentor or a trusted advisor can make all the difference. Surround yourself with a team of experts—real estate professionals, tax advisors, and operations specialists—who can guide you through complex decisions and help you avoid costly mistakes.
“If you have the right team around you, it accelerates your success,” says Casey. Real estate investing doesn’t have to be a solo venture. Leaning on experienced professionals ensures that you’re making informed decisions and not second-guessing yourself.
Private Foundations: A Game-Changer for Wealthy Investors
For those who want to protect their assets while building a lasting legacy, Casey recommends considering a private foundation. This often-overlooked tax structure can be an essential tool for both high-net-worth individuals and accredited investors.
Private foundations not only protect your wealth by keeping assets out of your personal name, but they also create a legacy that can be passed down without the hassle of probate. Furthermore, when structured properly, it can lower your effective tax rate to as low as 1.39%, similar to the ultra-wealthy who use these structures to optimize their tax positions.
Capital Gains Tax Deferral
For real estate investors, one of the most critical considerations is capital gains tax. While a 1031 exchange can be used to defer taxes when swapping one investment property for another, Casey emphasizes that with the right structures, it’s possible to eliminate capital gains tax altogether in some situations.
This is where strategies like opportunity zones and private foundations come into play, helping you not just defer, but potentially eliminate capital gains taxes while building wealth.
Building Generational Wealth: Balancing Hard Work, Legacy, and Family Values
Creating generational wealth isn’t just about accumulating money—it’s about establishing a legacy that can stand the test of time. In a candid conversation between Dwan Bent-Twyford and KC Chohan, they discuss how to build wealth, protect it, and ensure that future generations maintain the work ethic and values that helped create it.
The Importance of Work Ethic and Values
Dwan shares a compelling personal story about her family’s roots and how she and her husband, Bill, became the first millionaires in their blue-collar families. Reflecting on her own upbringing in Ohio and Bill’s in Iowa, she expresses a mixture of pride and frustration. “Why didn’t my dad or grandfather start something?” she wonders. Dwan and Bill are now at the top of the food chain, and they have a rare opportunity to establish a foundation for generational wealth.
But building wealth is only part of the equation. As Dwan points out, it’s crucial to instill the right values in the next generation. While they were determined to give their children a better life, they didn’t want them to grow up expecting everything to be handed to them. “We made our kids work for everything,” Dwan explains. Whether it was buying their own dirt bikes or earning money for tickets to concerts, her children learned the value of hard work. She has continued this philosophy with her grandchildren, teaching them responsibility and the importance of earning what they want.
KC Chohan agrees, emphasizing that many wealthy families fail to pass down the right mindset. “By the third generation, the wealth is usually squandered,” he notes, citing studies from elite families. He highlights the significance of teaching future generations not only financial management but also the mindset that goes into creating wealth—an ethos that many rich families forget to instill.
Protecting Wealth Through Legacy Planning
Beyond ensuring that children and grandchildren develop a strong work ethic, families need to plan for the future. According to KC, establishing a legacy involves more than just wealth—it’s about building a strong family culture around success, philanthropy, and community involvement. “You should be doing at least an annual retreat with the family to talk about the portfolio, the investments, the community,” he advises.
The idea is to create a multi-generational perspective. Rather than focusing solely on passing down money, families should discuss investments, charitable giving, and how to improve the community they live in. Such regular family meetings are vital for ensuring that wealth is preserved, managed, and expanded for the future, as seen with some of the wealthiest families in history, like the Rockefellers.
Avoiding the Pitfalls of Spoiled Inheritance
Dwan and KC both share a deep concern about the next generation becoming “spoiled” by inherited wealth. While it’s natural to want to make life easier for your children and grandchildren, there’s a fine line between helping them and enabling entitlement. “If you’re giving them everything on a silver platter, you’re taking away their determination,” KC cautions.
Dwan shares how she keeps her grandchildren grounded by making them work for everything they want. Whether it’s helping her clean or doing chores, Dwan ensures that her grandchildren understand the value of earning. By doing so, she hopes to avoid the fate of other wealthy families whose descendants squander their fortunes.
Real Estate: A Steady Path to Building Wealth
One of the most effective ways to ensure that wealth continues to grow is through real estate. KC points out that while hard work is essential, the real key to building wealth is having money make money for you. “Being wealthy is when your money is making money while you sleep,” he says. Real estate, in particular, is a fantastic way to build wealth that generates passive income, even when you’re not actively working.
Dwan and Bill have found success by investing in properties, including their home town in Iowa, where property values have risen by 40% since they began investing. By adding value to their community, they’re also increasing their wealth in the process. This long-term approach to real estate mirrors the legacy-building mindset that is key to preserving generational wealth.
Starting Your Own Business: A Path to Control
While Dwan and Bill have built their wealth through real estate, they also emphasize the importance of entrepreneurship in controlling your destiny. KC, having transitioned from a corporate career to starting his own business, stresses that being your own boss gives you the ability to make decisions and control your future. “When I started my own company, it was tough, but it was also incredibly rewarding,” he says.
For anyone considering entrepreneurship, the key is perseverance and surrounding yourself with the right team. You don’t have to be an expert in every area of business. As KC discovered, hiring experts in sales and marketing allowed him to focus on what he knew best, while scaling his business effectively.
From Corporate Comfort to Entrepreneurial Adventure: The Journey to Building a Legacy City
When embarking on the journey of entrepreneurship, fear and uncertainty are inevitable, especially when stepping away from a stable, high-paying job to venture into the unknown. For KC Chohan, a seasoned CFO who transitioned from a multi-six-figure corporate salary to launching his own business, the fear was simple yet profound: “How am I going to make money?”
The Leap of Faith
Making the decision to leave behind a comfortable corporate life and dive into the world of entrepreneurship is never easy. KC’s leap, however, was a calculated one. He didn’t wait until the last day at his corporate job to start his new venture. Instead, he built the foundations of his business—pitching services, setting up a website, and starting the revenue streams—before officially resigning. This preparation allowed him to transition smoothly and confidently, backed by an already established revenue source.
“I backed myself,” he says. “You really have to have the confidence to know that you’re doing this for your own vision, for your future.”
The Realities of Entrepreneurship: Overcoming Obstacles
Starting out, KC faced many challenges. While he initially secured clients, the road wasn’t always smooth. His journey wasn’t without obstacles, especially given the complex nature of CFO services. “You can ask 100 people what CFO services are, and you’ll get 100 different answers,” he shares. The job varied drastically depending on the industry—whether it was real estate or Fortune 500 companies—making it difficult to define his services and educate potential clients. Despite these challenges, KC didn’t let them deter him. Instead, he focused on his ability to translate complex financial situations into terms that everyone could understand—a skill that eventually became the foundation for his business.
Pivoting and Seizing Opportunities
Through perseverance and strategic thinking, KC recognized an opportunity in helping others save on taxes—something typically reserved for the ultra-wealthy who have access to a family office. In simple terms, a family office is a financial management service for high-net-worth families, providing personalized attention in all aspects of wealth management, from real estate to insurance.
But instead of serving only the elite, KC saw an opportunity to democratize these services and help others access the kind of expert financial advice that was once only available to billionaires. His business pivoted to focus on tax savings, offering the same level of expertise and personalized service to clients who might not have the resources to afford a family office.
Taking Risks and Embracing Personal Development
KC’s journey hasn’t been without its risks. When asked about the biggest challenge of starting his own business, he admits, “It’s the risk factor. Starting your own business is risky, no matter how much you plan.” But he recognizes that risk is part of the process. “If your risk factor is zero, then maybe entrepreneurship isn’t for you,” he says, adding that some entrepreneurs are more willing to “jump off the building and grow their wings on the way down.”
But risk alone isn’t enough. The foundation of his success was built on personal development. To build confidence and clarity, KC immersed himself in self-help and motivational content, listening to thought leaders like Tony Robbins, Robert Kiyosaki, and Jim Rohn. By developing a higher level of self-awareness, he was able to quiet the inner doubts and take decisive action. “You need to have that belief in yourself,” he says. “Personal development is key to removing the mental roadblocks that prevent you from taking action.”
The Power of Teamwork
KC emphasizes the importance of having the right team. “Having the right team means you’re going to make better decisions, move faster, and ultimately make more money,” he explains. With a skilled team, the process of achieving great financial success becomes much quicker, leading to exponential growth. This idea reflects his belief that success doesn’t happen in isolation—it happens when you surround yourself with the right people, the right knowledge, and the right systems.
A Vision for the Future: Building a City from Scratch
Looking ahead, KC has set his sights on a monumental goal: developing a city from scratch. Inspired by the transformation of Orange County, CA—once known for its orange groves—he envisions creating a sustainable city that provides for generations to come. “We want to create a city that helps everyone,” he says. This ambitious project involves not just building physical infrastructure but creating an ecosystem that can thrive for years, something that’s rarely attempted in the world of real estate development.
While the logistics and financing of such a project are daunting, KC’s vision is clear. “You need billions of dollars to do this,” he admits, but the dream is real, and it’s something he’s determined to see through.
How You Can Help
As KC continues to build his empire, he’s not just focused on personal success; he’s also committed to helping others along the way. “The Dwanderful family can help by supporting me, and together, we can make things happen,” he says. From launching new ventures to making bold moves in the real estate industry, KC’s journey is a reminder that with the right mindset, persistence, and a commitment to personal growth, anything is possible.
Whether you’re looking to take the leap into entrepreneurship or simply seeking to make smarter financial decisions, KC’s story offers valuable lessons on backing yourself, taking risks, and building a life that reflects your highest aspirations.
Join the Journey
Are you ready to take your next step toward financial freedom and personal success? Let KC’s story inspire you to invest in yourself and create a legacy that lasts.
Conclusion
In conclusion, real estate investing offers countless opportunities for those willing to take the time to understand the market, identify profitable properties, and build a solid financial foundation. By focusing on key strategies such as property analysis, understanding local trends, and leveraging financing options, investors can successfully grow their portfolios and achieve long-term success.
At Dwanderful, Dwan, a seasoned real estate investor and podcast host, is dedicated to empowering others with the knowledge and tools necessary for success in real estate. Through her website, Dwan offers valuable resources, including a free book titled “Real Estate Lingo” to help beginners understand industry terminology and a paid book, “Five Pillars of Real Estate Investing,” which dives deeper into the core strategies for effective real estate investment. These resources, combined with Dwan’s experience and insights, are perfect for anyone looking to expand their real estate knowledge and take actionable steps towards profitable investing. Book a call now!
