Top 5 Benefits of Residential Real Estate Investment
My colleagues and I have been tossing around newsletter ideas this past month and have decided our next issue will describe how to create college savings for your children and grandchildren through a home purchase. To this end, another agent just handed me an intriguing list that details the benefits of investing in residential real estate. This list has five benefits, while most other investments offer only one or two.
- Cash Flow. The rent provides income. A wise real estate investment will pay for itself on a monthly and annual basis, while paying the note. Your ultimate goal is to own property “free and clear,” which creates maximum cash flow.
- Leverage. You can own $150,000 worth of real estate with only 15-20% cash. You can borrow cash from one property to buy another. Your short-term goal is to use leverage to acquire a portfolio of real estate. Your long-term goal is to pay the loans off and own your properties “free and clear”
- Debt Reducation. Real estate is one of the few investments where someone else will make your payments. In essence, the tenant makes the payments and reduces your debt.
- Tax Savings. You are allowed to depreciate the house and write off your expenses in order to reduce your taxes*.
- Appreciation. Over time the value of houses and condos have risen. The average value of home has traditionally doubled in value every 15 years**.
*Consult your accountant or tax attorney to specifics related to the tax benefits of investing in real estate.
** The government Office of Federal Housing Enterprise and Oversight figures appreication rates for Metropolitan Statistical Areas around the county. Check this site to see what appreciation rates have been in your area.
Coming Soon: How to buy a home to pay for college on behalf of your children and grandchildren.
