NASHVILLE, TN - 2016 St. Joseph-Ogden graduate Jake Pence hasn't let the pandemic slow him or entrepreneurial pursuits down. The real estate business he founded two years ago is now based in Music City. Kaski, formerly known as Blue Chip Real Estate, is a real estate investment firm "focused on luxury short-term rentals in Nashville and value-add multifamily properties in Central Illinois and Middle Tennessee."
This is a short-term rental in Nashville that Pence purchased and has since renovated. See more photos on his Instagram page where he describes his acquisitions experience. Photo courtesy Jake Pence
Pence's fledgling business has grown from managing four units valued at $250K to 83 worth $7.5 million. He also raised $2.15 million in equity from 23 investors who believe in his vision. After graduating from the Gies College of Business at the University of Illinois in 2019, Pence had a choice to join the corporate world or hop on the sometimes turbulent, unpredictable path of entrepreneurship. He chose the latter. The first year-and-a-half was a little rocky, but Pence made some strategic moves that have paid off. "For the first year & a half, it seemed like I had placed a bad bet," Pence wrote in a Facebook post. "However, thanks to the help of numerous people, especially Jared Blaudow, Kendra Pence, & Todd Pence, Kaski finally started to gain traction in the summer of 2021 & was able to close out the year strong." He also found time and the opportunity to start a new subsidiary business called Stay Music City. The operation is a short-term stay property management company offering luxury single-family homes to an estimated 16.2 million visitors a year to not only the home of country music but also fans looking for a place to stay attending collegiate and professional sporting events, conferences or work-related trips. Kaski is also set to close on a deal for two apartment complexes this quarter that will more than double the number of residences in their rental portfolio. "We're still a very small fish in a very large pond, but I'm excited to see what we can accomplish in 2022 & beyond," he said, who earned varsity letters in three sports at SJO. When asked what advice he would give aspiring entrepreneurs and real estate developers, he offered sound advice. "Be impatient with action, yet patient with results," he said. "Don’t take yourself too seriously or get too caught up in the highs and lows, just take consistent action over a long time period and you will start to see results."
For the majority of investors, taxation should never be the main driver behind an investment. However, taxation should absolutely be considered in an efficient investment portfolio. At the end of the day, how much money you keep is more important than how much money you earn.
The Internal Revenue Source (IRS) has written a painfully long book called, "The Internal Revenue Code" otherwise known as the tax code. The tax code isn’t painfully long and dense because of the many different ways the IRS can collect taxes. In fact, the collection of taxes is rather simple. If you make “X”, then you pay “Y.” Rather, the tax code is so long because of the many ways you can legally reduce your tax liability.
Individuals are able to reduce their tax liability if they perform actions that the government likes. One of the government’s favorite actions is providing housing to the public; therefore, there are many great tax benefits for real estate investors. One of the great real estate tax benefits is depreciation.
Real estate depreciation allows you to deduct the costs of a property over its useful life (as determined by the IRS) which reduces your taxable income. This is known as a “paper loss” because on paper it looks like the value of your investment decreased when, in reality, the value of your property likely increased due to appreciation and you collected monthly cash flow from the property if your income was greater than your expenses.
The tax benefits of real estate are very powerful and warrant their own article; however, this is how the wealthy stay wealthy. They buy real estate and legally reduce their taxable income, so they keep more of their money and then use that money to buy more real estate. It’s not complicated, and it’s 100% legal.
When it comes to taxation, real estate is the belle of the ball; however, stock market investors are able to place investments in tax efficient accounts and control the timing of their capital gains. The main tax benefit available to stock market investors is the ability to defer taxes through retirement accounts such as 401(k)s, 403(b)s, and IRAs. Additionally, you are able to choose the timing of the taxation by electing the account to be a “traditional” or "Roth" retirement vehicle.
With a traditional IRA, you are able to deduct your contributions in the year they are made, but you must pay taxes on them once you withdraw the funds. This is ideal for someone who thinks they will be in a lower tax bracket once they are retirement age. You contribute after-tax dollars to a Roth IRA, so this is ideal for someone who thinks they will be in a higher tax bracket once they retire. If you hold a specific stock for longer than a year, then you are no longer subject to the highest capital gains tax and this will allow you to keep more of your earnings.
Before we dive into the weeds, let’s preface these tips with the fundamentals of money management in a recession. First, you must live within your means and minimize discretionary spending. Second, you must prioritize saving and building an emergency fund of at least six months worth of expenses.
Third, you must continue to make your debt payments. If you want to learn more about any of those fundamentals then you’re a google search away, but my goal is to give you tangible, long-term tactics that will set you up for success both during and after this recession.
St. Joseph-Ogden's Ty Pence was named to the 2020-21 
Yesterday, St. Joseph-Ogden High School announced the school's second quarter honor roll receipents. This quarter, 166 students earned High Honor Roll recognition for their academic efforts. Forty-five students in both the sophomore and junior classes secured a GPA above the requisite 3.74.
