Real Estate Is An: I-D-E-A-L  B-U-Y

Income – Apartment buildings and other commercial properties are called “Income Producing Properties” They are called that for a reason – they produce positive cash flow after all expenses are paid. This income is generally higher than other income producing investments like bank CDs, Treasury’s, corporate bonds and stock dividends.

Depreciation – Depreciation means you often have to pay little or no tax on the income in the year you earn it. In some cases you may even be able to shelter other income from taxes. Another tax advantage is you can defer taxes from the profit of a sale by doing a 1031 exchange.

Equity Build Up – Over time real estate tends to go up in value. This is what will build real wealth. This will overshadow the cash flow in the long run.

Amortization – The gradual pay down of your mortgage. Your tenants are paying this for you.

Leverage – Multiply the other advantages above. Leverage increases you return on investment.

 
 

Below Market – Real estate can be purchased below market. Motivated sellers may reduce their price to sell quickly and not all sellers will recognize the potential value you see.

Upgrade the property – You can make improvements to the property to increase it’s value.

You are in control – You choose what to buy and for how much. You choose when and how to upgrade your property. You can change management, control expenses, or upgrade the tenants. You have control of your investment and can improve your returns and reduce your risk through you knowledge and actions.

Try going to the headquarters of General Motors and doing a little landscaping and painting; is that going to increase the value of your stock one bit? Try negotiating with you broker to buy stocks or bonds below today’s market price; It’s not going to happen.