What is the best use for $200,000 sitting in my business’s savings account? Should I use it to start up another small business in order to purchase an investment property?
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Follow these steps:
1. Incorporate a company to purchase real estate (e.g. Real Estate Inc.)
2. Make a tax-free loan (e.g. $200,000) from your existing operating corporation to Real Estate Inc.
3. Charge 1% interest on the loan to be paid by December 31 of each year
4. Real Estate Inc. will use the loan proceeds + a bank mortgage to purchase the property
5. Real Estate Inc. will collect rents, pay for the mortgage, and relevant property expenses
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