The Benefits of Real Estate Investment
Do you have a heart to invest? If so, are you interested in real estate? In the recent times, Real estate has exceedingly opened up to different classes of people. Most individuals are now investing their money in this business. It is obvious that once you see many people investing in any particular business, the advantages of such business are great. Capital returns in real estate is always good especially when you have someone else paying for your mortgage. Would you like to know the kind of other benefits you can gain once you start investing in real estate? Is your money lying idle in bank accounts in the name of savings with hardly some little interest at the end of the year? Upon reading through this article, you will not like to see your money lying idle in the bank accounts. These benefits include;
Capital Gains: Real estate property keeps on increasing in value. As a result, most citizens have taken advantage of this appreciation and as such, you will realize that most real estate owners are wealthier.
Cash Flow: As an investor, you are eager to generate positive capital returns above the rental income once your expense has been recovered. You are assured of this money getting into your account or pocket for every month. As the market rates for rent increase, the same cash flow increases over time.
Use of Leverage: Indeed, Real estate investment is a high-cost business. However, a little cash is needed to help in purchasing the investment once you involve borrowing. You will do this if your borrowing qualifications with existing financial institutions are met. In order to make a move to purchase any property, you need to talk to a financial loan officer of a particular financial institution so as to find out your buying power and be able to set out your options. In fact, you will come to understand that leverage is only used in real estate investment alone.
Resistance to Inflation: Your monthly mortgage payment is usually fixed. As a result, inflation resistance is an obvious phenomenon in real estate investment. For goods and services, the prices increase whereas monthly mortgage payment remains constant. As time goes by, you will increase rent on your renters and as a result, your income increases.
Tax Incentives: Such benefits are uncommon to most businesses. They include; business expense deductions, depreciation, tax-free investment with Internal venue Code (IRC). In these benefits, you are allowed to purchase like-kind investments that are tax deferred.
Consider this incident of one of my clients; the family of my client owned a clear property from the year 1950’s having been rent for several years. If my client would have sold this property with the current market price, he would make huge capital gains from the original purchase price of $50,000. The current selling price for the property amounts to $1,200,000. He would pay possible taxes on $1,150,000 having deducted any improvements and monies put into the property.
When you invest in real estate, tax deferral increase cash flow every month and also lead to diversification of real estate portfolio thereby positioning it for a long term appreciation.
Author: Naomy Fraser