Aside from being your own boss, having the freedom to travel while earning profits, increasing your net worth, and having a place of your own to call home, investing in real estate holds even more benefits.

 

1. Appreciation Potential-Appreciation is the increase in value of the property.  There are two kinds of appreciation.  The first is from economic conditions beyond your control, such as inflation.  But you won?t gain much from this type of appreciation since the gain is offset by the higher cost of living.  The second kind is market appreciation, which you can control.  When you improve a property (through renovations), you force its value higher.  You can purchase a piece of property in need of repairs and bring it back up to neighborhood standards or slightly higher; this will give you a property that is much higher in value.

 

2.  Cash Flow-Cash flow is the difference between you income and you expenses on a piece of property.  You can have a positive or negative cash flow.  Obviously, you?ll feel a lot better if the cash flow is positive.  My advice on cash flow is this: Never use all of your positive cash flow for rapid debt reduction.  You will be walking a thin line. By keeping a strong positive cash flow, you will have more options and space to maneuver.

 

3.  Tax Depreciation-Tax Advantages-Owning real estate with the goal of making a profit allows you to deduct interest payments and other expenses come tax time.  But don?t be fooled into buying real estate for the tax advantages; rather, purchase it because it makes economic sense to do so.

 

4.  Pride of Ownership (tangible versus stocks, etc)

 

5.  Peace of Mind (buying for children, parents, etc)

 

6.  Equity Build up as you pay off mortgage!-Amortization- With leverage, or the use of other people?s money, comes a repayment schedule.  Your outstanding balance is reduced with every payment you make.  Part of each payment goes to interest (applied first) and the rest goes to pay off the principal.  The principal reduction is called amortization ? reducing debt.  Hence, amortization can make you wealthy, slowly and steadily.

 

7.  Ability to grow tax deferred with 1031 Exchanges

 

8.  Leveraging your money using Other Peoples Money to Build Wealth!-Leverage is the ability to borrow a percentage of the value of a piece of property.  Real estate, in comparison to other investments, offers a very high degree of leverage.  In some cases, a couple buying a single-family home can obtain 95% financing.  This allows individuals to purchase real estate with little, if any, of their own money.  What other investments offer such a high degree of leverage?

 

9.  Long Term Wealth

 

10.  Security in the long run