Rentals and Generating Wealth
Why you should invest in RE
As Mark Twain said, “Invest in RE; they are not making it anymore.”
There are many benefits of investing in real estate.
“With well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, and diversification-and it’s possible to leverage real estate to build wealth.”
CASH FLOW
This is the money kept after operating expenses. This is the rent you charge, minus the mortgage and operating expenses. Over time, your cash flow will rise as the mortgage gets paid down and rents increase. And the equity in your investment is increasing with every payment.
TAX BREAKS AND DEDUCTIONS
Investors can deduct the costs of owning, operating, and managing a property.
When you get a new roof added or repaint, these expenses can be deducted at tax time. So, not only are you adding value to your investment, you are lowering your tax burden at the same time. These improvements can also increase rental income. A well-kept home is very attractive to a renter.
APPRECIATION
The value of real estate tends to increase over time. When it’s time to sell, this can bring a tremendous profit.
I’ve seen tenants pay for rental homes 3 times over for the landlord. If the house is well taken care of and rented at a reasonable rent, I’ve seen tenants stay for over a decade many times. Do this 3 times in a row and the house is paid off.
BUILD EQUITY AND WEALTH
“As you pay down a property mortgage, you build equity; an asset that’s part of your net worth. And as you build equity, you have the leverage to buy more properties and increase cash flow and wealth even more.” investopia.com
PORTFOLIO DIVERSIFICATION
In the last few years, I’ve seen my market investment portfolio yoyo without having any control over it. I watched it spiral down and down during COVID without any means or understanding of how to change it. My choice was to keep or sell; that’s it.
On the other hand, rents stayed the same. The value of Real Estate was not only healthy but increased as the chart above shows.
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