It has often been stated that multifamily real estate is the IDEAL investment for creating wealth. When executed correctly, multifamily real estate is one of the most profitable business ventures, offering limitless earning potential. Investing in multifamily real estate (with precision) brings excellent rate of returns, amazing tax advantages, and opportunities to develop a passive income stream.
Here are 5 reasons why so many investors consider real estate an IDEAL investment:
I - Income Receive cash-in-hand, monthly. Investors maintain control over a property's revenue stream. You make the decisions affecting the profitability of your income-producing asset. You've officially reached 'boss' status.
D - Depreciation Earn more, pay less. Why are the wealthy taxed lightly? Because of phantom expenses known as tax-benefits; owners write-off property depreciation as an expense. Effectively utilizing 'loopholes', in regards to property ownership, grants flexibility. Remember the old adage, "a penny saved is a penny earned".
E - Equity Increase ownership for free. Is this possible? Yes, with happy tenants. They pay you, you pay the mortgage. The principal balance shrinks as equity rises. Each month you own a bit more of the asset than when you initially purchased it. Get excited!
A - Appreciation Relax as property values mature. How can assets depreciate and appreciate simultaneously? Over time; forced by the owner or the market. Owners appreciate their properties with rent increases, property repairs, home additions, etc. This is termed forced appreciation. Properties also experience market appreciation; which can include population growth, increased employment opportunities, and area beautification. Competent investment decisions and management efforts not only maximize profit but grow asset value. It's not 1 way to do 50 things but 50 ways to do 1 thing; in this case, increase profits.
L - Leverage Investors acquire properties through mortgages. A maximum 20% down payment for total control, an exceptional deal. Anyone can prosper from this unbalanced transfer of ownership. Investors also employ current assets to acquire additional assets by capitalizing on built-in and/or earned equity. Yet another way to take advantage of a prime investment.
In addition to the IDEAL reasons above, investing in real estate can bring the following advantages:
- Tax-Free Refinancing: In the United States, mortgage proceeds even from refinancing are not taxable income to you. Therefore, refinancing is a way to recover your cash investment and, in some cases, you profit tax-free.
- Pride of Ownership: You may find greater personal satisfaction in owning property than stock certificates.
- Investment and Consumption: Certain types of real estate, such as land and vacation homes, can serve both as investments and as sources of pleasure through use.
Are you looking to purchase a property and need a way to submit the opening offer? We invite you to download ourLetter of Intent (LOI)document to submit to the seller's real estate agent to make an initial offer and begin negotiations.