As an investor, you can choose from a variety of opportunities, one of which is real estate. Residential real estate offers advantages unavailable with most other investments, including:
Cash Flow – Real estate is one of the only investments that can begin to produce cash flow on day one. Rents hardly ever decrease over time, so you maintain the ability to increase your monthly cash flow in the future.
Leverage – You can actually leverage your purchasing power, taking on less risk, while collecting monthly rents and experiencing appreciation (higher property values) on someone else’s dime. Your borrowed money is going to work by allowing the tenants to cover all of the expenses associated with the property, providing you with both monthly cash flow and the annual appreciation increase as well!
Principal Buy Down – The tenant is paying the mortgage monthly which allows the principle amount of the loan to be reduced every year while the tenant(s) are paying for you to own the property out right.
Tax Benefits – Any reduction (repairs, depreciation of asset) can be helpful when seeking tax deductions. Talk to your CPA as this, for some, can be reason enough to purchase a turn-key property.
Inflation – Real estate happens to be one of the best ways to keep ahead of the inflation curve. As inflation happens, two beneficial things also take place - your rents go up, as does the value of your property.
Appreciation – The market is rebounding to pre-market crash values, which means that you get to ride the appreciation wave while experiencing a positive monthly cash flow if purchased correctly. We are not big proponents of purchasing property solely based on appreciation, but it is a benefit of buying and holding property over an extended period of time.
IRA & 401K – You have the option to purchase investment properties with your IRA, provided you set it up correctly. This allows you the flexibility to invest your dollars where, when and how you choose and the investment is “secured” by real estate. Try using the word “secured” when investing in the stock market.