Real estate has long been considered a solid investment for many reasons. It is a relatively safe and easy way for people to build wealth beginning with a small amount of money. If you are interested in investing in real estate, Gabe would be happy to help you find the right properties.
Here are some of the ways investing in property can help you build an investment portfolio.
1. Real estate investments can provide you with a reliable and steady cash flow. Investing in
rental properties is relatively easy as expenses are predictable and if your properties remain
occupied you know what to expect in terms of profit margin.
2. Real estate appreciates in value. Real estate consistently appreciates, even during economic
downturns, making it one of the more reliable investments. On average, real estate in the US
appreciates between 3-5% annually.
3. Real estate investments help you retire. If you have been paying on your mortgage throughout
your working years, you will experience greater cash flow as you near the end of your
mortgage term and the principal is paid off.
4. Real estate sales are taxed at a lower rate than other income. When you sell your property,
you are taxed short- or long-term capital gains which are usually lower than income tax
brackets.
5. Real estate equity can be leveraged. One of the most attractive reasons for investing in real
estate is the ability to leverage your money. When you take out a mortgage to purchase
property you reduce the amount of capital required. As you build up equity in the property,
you borrow against the equity or refinance the original loan, freeing up cash to buy another
property.
6. You have control to improve upon your asset. Unlike an investment in stock, where you have
no control over how it performs, you can improve upon your real estate investment. Updating
or upgrading systems, finishes, appliances, and landscaping helps build value in your
investment.
7. Real estate gains taxes can be deferred. Under the 1031 exchange tax code, you can invest
the gains from the sale in one property to the purchase of another property without paying
taxes on the gains.
8. Real estate investments are depreciable. This is confusing, but you can legally claim a
depreciation expense on an investment property even though the value of your investment
property is actually appreciating. The depreciation deduction allows investors to generate a
higher cash flow while reporting a lower income for tax purposes.
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