We strongly prefer a long term investment of 10 years plus. Appreciation and tax efficiency have powerful long term effects

Columbia Gorge Capital and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Fundamentally, this is a value investor framework. “Buy and hold” is a tried-and-true strategy for building wealth over the very long term. It works not just because of the power of long term appreciation and compounding; it’s avoiding the long term drag of taxes and transaction costs that take a few percentage points off annualized performance and reduces cash available for reinvestment. 

• An open-ended hold allows us to capture appreciation opportunistically and drives cash flow increases based on land scarcity. 

• Valuation growth is driven by tight geographic constraints, robust regional population inflow, and lifestyle community status.

• Real estate profits are tax efficient via depreciation and cash-out refinancing. Like our investors, we seek to minimize taxes from capital gains. 

• Capital gains tax would be a large transaction cost, especially with depreciation recapture, which is the partial repayment of accumulated depreciation.

• Property taxes tend to diminish over hold time relative to the asset value. This is a key source of financial strength in states like Oregon and California.

• Brokerage fees for an asset sale are another transaction cost that diminishes profits.

• An asset sale represents an opportunity cost. If we sell an excellent asset, we then have to find another asset to replace it, preferably in a timely manner to avoid cash drag.