Credit Can Do More Than You Think: Commercial Real Estate

Tips on incorporating commercial real estate into your wealth plan.

Video Transcript:

Sam is an executive vice president at a Fortune 500 company. He loves his job but lately he's been itching for more time on the golf course and has decided he'd like to be fully retired within the next five years.

He shared his vision during his next regular meeting with his Wells Fargo Private Bank relationship team, and together they decided to review his options.

Sam's portfolio was in good shape due to years of careful planning, but in order to meet his retirement goal, he may need to adjust his plan.

During the meeting, Sam mentioned an interest in commercial real estate and his Private Bank team thought it might make a good addition to his investment mix.

They explained that owning a commercial property that includes leased tenants could provide monthly income that would allow him to move closer to his goal of early retirement. This would help diversify his portfolio as well as bring him potential tax benefits.

The team laid out the purchasing options if Sam were to pursue acquiring property. He could pay for the building outright, which would create equity but would also hurt his cash flow. He could sell some of the stocks or bonds in his current portfolio to purchase the building, which could trigger capital gains, and may disrupt the performance of his investment portfolio. Or, he could take out a loan. By using credit for the purchase he could keep his portfolio intact and still have the necessary cash on hand to maintain his current lifestyle.

Sam set out to explore different properties and after careful evaluation selected a retail complex that included several shops and office space.

Sam decided to use credit to make the purchase and scheduled a second meeting with his Private Bank team. The team's private banker explained the financing terms and loan structure, walking Sam through all of the steps necessary to complete the loan. By using credit strategically, Sam is well on his way to achieving his goal of early retirement.

Using credit to finance commercial real estate is one example of how credit can be put to work for you.

Let's start a conversation about credit. Contact Wells Fargo Private Bank to learn more.

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Wells Fargo Wealth Planning Center, part of Wells Fargo Private Bank, provides wealth and financial planning services through Wells Fargo Bank, N.A., and its various affiliates and subsidiaries.

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Past performance does not indicate future results. The value or income associated with a security or an investment may fluctuate. There is always the potential for loss as well as gain. Investments discussed in this presentation are not insured by the Federal Deposit Insurance Corporation (FDIC) and may be unsuitable for some investors depending on their specific investment objectives and financial position.

Wells Fargo & Company and its affiliates do not provide legal advice. Please consult your legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.

As of November 12, 2016, Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC. Historical videos may not reflect this update to the broker-dealer name.

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