“Real Estate is still the BEST Investment”
TIP #1 – Real Estate Generates Cash Flow
Cash flow is the net spendable income derived from the investment after collection of rent vs operating expenses, and mortgage payments. The investment return should be 7% or greater.
TIP #2 – Real Estate Increase in Value
Appreciation is the increased value of your home over time, depends on local real estate market and any upgraded improvements.
TIPS #3 – Real Estate can be Leveraged
Leverage works in your advantage when real estate market is on the rise. The most important advantage of real estate investing is leverage. It is the use of borrowed capital to increase the potential return of an investment.
TIPS #4 – Real Estate Provides Equity
Most real estate transactions with a lender require a 20% – 25% down payment with the balance of the money to be mortgaged from a lender. Over time, it reduces the principal mortgage. The principal reduction builds your equity.
TIP #5 – Real Estate Improvements adds Value to your Investment
The real estate investment is a tangible asset, whether the improvements are structural or cosmetic, the principal remains the same. However, the real estate is valued higher because of the improvements.
TIP #6 – Real Estate 1031 Exchange
The term 1031 Exchange is defined; under section 1031 of the IRS code. This strategy allows an investor to “defer” paying capital gains taxes on an investment property when it is sold, as long as another “like-kind property” is purchased with the profit gained by the sale of the first property. *Note, it’s important to consult with a real estate professional, 1031 specialist, and CPA for further guidance and reassurance of the 1031 program.
IMPORTANT FACTORS OF PROPERTY INVESTMENTS
LOCATION: Real Estate is about selecting a good location.
RENT: “Supply and Demand” if there are few rentals available, you will have higher occupied property percentages, if fact demand higher rents.
APPRECIATION: Although, cash flow is the primary consideration, appreciation in value over time is important. There are two ways in which you build equity in a rental property, appreciation in value and paying down the mortgage.
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