The 4 Biggest Benefits To Owning Real Estate, Investment property, and Real Estate Investing In General

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“Real estate is at the core of almost every business, and it’s certainly at the core of most people’s wealth. In order to build your wealth and improve your business smarts, you need to know about real estate.” -DONALD TRUMP

Real estate is an investment vehicle that anyone can invest in and my opinion there hasn’t been a better time. There are so many reasons why today is such an exciting time to either get started if you’re a beginner or to take things to the next level if you are already experienced in real estate investing. To name just a few:

Interest rates are at historic lows! Many experts say we may not see them this low again in our lifetime. It is a great time to get a fixed rate mortgage on your home or investment property.

Prices are relatively low right now. Although last year there was a significant increase in real estate values across the board for the most part values are still very affordable and on the upswing in most markets. (Of course real estate markets are very local and you need to do research on your specific location)

– The convenience of technology has made things so much easier for us when it comes to a lot of things and investing in real estate is no different. As a real estate principle (a buyer or seller) you can now go online and find out a ton of valuable information that was simply not available to you five years ago. In many cases you can pull comparable sales, street view photos, detailed maps, find out how much a seller paid for a property, pull property profiles which include all the important details, see school ratings in neighborhoods, crime rates, etc. You can do a massive amount of helpful research without even leaving the comfort of your home.

Education: Due to technology and the internet there is an abundance of information at your fingertips. You now have the ability to learn at such an incredible rate if you really want to and if you are willing to put in the work. The best part is much of this education is completely FREE or very inexpensive. One of the key factors that will determine how successful you are with your real estate investments or career is your level of knowledge and education. You can now download free reports, ebooks, books, audio programs, listen to Podcasts, read blogs or forums, go on YouTube, etc. etc. There is more high quality information out there and available for next to nothing than ever before in history.

So… what are the 4 Biggest Benefits To Owning Real Estate?

1) Leverage – This is a HUGE benefit that many people don’t even realize. For example, if you purchase a piece of real estate, it doesn’t matter if a single family home for yourself to live in or an investment property, and you paid $200,000 for it. If you paid cash out of pocket for this property and over a period of 5 years the property increased in value by 15% (assuming no other expenses for simplifying this example) then you would have made a return of 15% or $30,000. If you bought that same property with a 20% down payment out of pocket ($40,000) and an 80% loan from the bank and the property increased in value the same 15% or $30,000 then you would have make a $30,000 return on a $40,000 investment which is a 75% gross return. Not too bad of a ROI? Yes, or course to truly compare apples to apples you would have to factor in the cost of a mortgage, mortgage payments for the 3 years, and other expenses but this is a simplified example just to illustrate the extreme power of leverage an using it to increase your returns on investment.

2) Appreciation – This is when the property increases in value over time. Real estate tends to move in cycles and of course there are up markets, down markets, and flat markets and your rate of appreciate varies greatly on the geographic location of your property. However most real estate tends to appreciate over time and if the owner of the property is educated and knowledgeable often times there are ways to create and add value to a property quickly. Through repairs, rehabbing, increasing rental income, lowering expenses, etc. one can rapidly increase the value of a property rather than just waiting for the market to go up over time.

3) Tax Benefits & Savings – (Disclaimer: I am not an accountant or tax attorney and this is just my opinion. Please discuss any of your tax strategies with a qualified professional.) If you have decided to take advantage leverage and have a mortgage on your property you can usually write-off the interest you pay as a tax deduction and save yourself some money.

4) Depreciation – This tricky because even if your property increases in value big brother allows you, as the owner, to take a tax deduction of what they feel is the “life of the property.” For residential income property you can depreciate it over a 27.5 year period and commercial property can be depreciated over a 39 year period. Talk to your CPA about depreciation it can give you great deal of write-offs and save you money on taxes.

A bonus benefit if you own investment property or rental real estate!

5) CASH FLOW – Positive monthly cash flow is an added bonus! If you buy a property with all cash or buy it right with a reasonable mortgage and low monthly payments you can likely experience positive monthly cash-flow or passive residual income. In my opinion, this is something that every real estate investor should strive to have in their portfolio.

To get more information on the buying, selling, or investing in multi-family apartment buildings, call Rob Castro at (949) 922-0393 or visit http://www.robcastrobroker.com/

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