Editor: Crass Cash
I read recently that real estate is the I.D.E.A.L. investment. As in...
Income: Make sure you have a positive cash flow real estate investment that produces Income for you.
Depreciation: For tax purposes you get to depreciate the value of the building. This helps you pay less in taxes now. You'll eventually have to pay them, but you can put that off until you sell the property. Or indefinitely if you keep doing 1031 exchanges.
Equity: By making your monthly mortgage payment you're building equity in your loan. It's like owning more and more of your home each month.
Appreciation: Depending upon where you live this can be significant, but generally speaking home prices go up with inflation and economic growth, so about 5% after inflation. This is a huge part of your eventual return!
Leverage: By using other people's money you can leverage your above appreciation to spectacular gains. Although as we saw with the housing downturn you could be wiped out as well. If you leverage 5:1 like a normal mortgage you can get a 15-25% return every year if your home appreciates in value along with the long term fundamentals of 3-5% appreciation growth.
Income: Make sure you have a positive cash flow real estate investment that produces Income for you.
Depreciation: For tax purposes you get to depreciate the value of the building. This helps you pay less in taxes now. You'll eventually have to pay them, but you can put that off until you sell the property. Or indefinitely if you keep doing 1031 exchanges.
Equity: By making your monthly mortgage payment you're building equity in your loan. It's like owning more and more of your home each month.
Appreciation: Depending upon where you live this can be significant, but generally speaking home prices go up with inflation and economic growth, so about 5% after inflation. This is a huge part of your eventual return!
Leverage: By using other people's money you can leverage your above appreciation to spectacular gains. Although as we saw with the housing downturn you could be wiped out as well. If you leverage 5:1 like a normal mortgage you can get a 15-25% return every year if your home appreciates in value along with the long term fundamentals of 3-5% appreciation growth.
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