Why Invest in Real Estate?


Why Invest in Real Estate?

3-12 Unit Properties in ChicagoInvesting in real estate has many advantages and is proven to be one of the best ways to build wealth. Two of the ways investors build wealth are obvious but the other two are often overlooked especially with young investors just starting their investing journey. Let’s begin with the obvious.

  1. Cash Flow. This is quite simple. The income generated from the property is greater than the expenses and debt. Therefore, creating income for the owner and investors.
  2. Appreciation. Real Estate valuations tend to go up over time although it is not a given. Factors such as economic growth, supply and demand, inflation, infrastructure, and development all play a factor. Renovations and upgrades also play a role which is more referred to “forced appreciation.”

The two ways that are typically less discussed are.

  1. Tax Advantages. One of the biggest advantages of owning real estate are the tax advantages that come with it. There is depreciation, cost segregation, 1031 exchange opportunities, and many other tax strategies. Engaging with a good accountant with real estate experience can guide an investor.
  2. Amortization. You may have heard the phrase of “letting someone else pay your mortgage.” Well, this is true. Every month those renters are chipping away at the principal on the that loan. It is often overlooked because it is not seen in the bank account and only shows up on paper until you that day you sell the property. Work with a lending professional to best understand financing options and try to look into the future of that equity gained.

Real Estate investing is proven to build wealth but doesn’t come without risks. We can help guide you in your investing journey and always be a valuable resource at your service.