Today, I’m here with the second and final video in our series about the seven benefits of buying rental real estate. You can find the first installment here.
Last time, we talked about cash flow, appreciation, and depreciation. Now, it’s time to learn about:
4. Leverage. When you purchase rental real estate, you are able to leverage other people’s money to buy the property. For example, if you buy a $200,000 rental property at 20% down, you’re putting $40,000 of your own money into the property. You will gain appreciation in that property and get cash flow while someone else pays down your mortgage.
5. Write-offs. When you own a rental property, it’s like owning a business, which means you get a lot of write-offs that you can use to your benefit. You can write off things like repairs, HOA fees, and management fees. If you and your family like to travel to Hawaii or St. George, you can buy a rental property there and write off your travel expenses. Talk to your accountant; there are a lot of things you can do with write-offs. There are many ways you can manage your rental property to benefit you and your family and get the lifestyle you want.
6. Real estate is a tangible asset. Unlike stocks and bonds, which can change quickly, real estate will always be there. In 2008, 2009, and 2010, the stock market changed drastically. Real estate was still there. In fact, rental real estate was in even higher demand at the time.
7. Real estate gives you options. You can always sell your rental property, use seller financing, purchase another investment through a 1031 exchange, and defer your capital gains taxes so you can use that profit to buy something bigger. In the worst-case scenario, you can always live in your rental property.
As you can see, real estate is a great investment option.
If you are thinking about starting to invest in real estate or would like to add more properties to your portfolio, just give me a call or send me an email. I would be happy to help you.