But when it comes time to sell these properties, are there right and wrong ways to roll over the proceeds to new real estate investments?
Hornstock bases his insights on his firm's two decades of experience in partnering with real estate investors to maximize returns tied to real estate investments.
His firm specializes in providing services that add value in leasing, investment sales, property management, construction management and advisory, and by organizing opportunities for its clients to participate in the ownership of real estate. "First things first, you have to understand the goal of reinvesting," Hornstock says.
The sale of a business or an investment property normally requires the seller to pay tax on the gain at the time of sale.
The seller can postpone paying taxes on the gain if the proceeds are reinvested in a similar property as part of a qualifying like-kind exchange.
If your grandfather bought a property in 1950 for $100,000, and it's been kept in the family since, and you sell the building for $1 million, you'd normally have to pay taxes on the gain of $900,000.
New under the revised tax laws is the qualified business income deduction.
Timing and location In Hornstock's view, worrying about when to reinvest makes no sense.
Doing your due diligence, getting comparables, you can do that in five minutes but you still have to be able to process the information, because there's a guy in New Delhi doing the same thing."