Five reasons why real estate investing is ideal

Many people are looking into investing in real estate most if not all because they believe it  is ideal. I belong to three biggest networks in my area. In the latest network that l attended ,the guest speaker Don Derosa  from Atlanta could not have reinforced more why real estate is ideal. This reminded me why l invest  long term when it comes to real estate. This blog discusses the acronym ideal as relates to real estate investing.

Income

The I in the word Ideal stands for income generated from real estate. They are various ways of generating income this could be from wholesaling, lease options, holding rental units.  Real estate provides a good source of income. This could be both short term or long term.

Depreciation

The letter D stands for depreciation. Depreciation makes real estate a favorable investment choice because it’s also treated as an expense for tax purposes. While only an expense on paper (since the owner actually pays nothing for it), it can nonetheless offset or shelter other income from taxation.   Thus each year depreciation reduces the yearly income tax that l pay by reducing the reportable net income.

Equity

The Letter E stands for Equity.Equity is the financial interest or cash value of your home, minus the current loan balance(s). If selling the home, this would also be minus any costs incurred in selling the home.  Every year am l pay down my mortgage my equity increases.  So if l hit a hard time and wanted some moneys all l would do is get a loan against the equity in my property and the tenants are paying for my loan

Appreciation

The A is for Appreciation. Appreciation is the increase in value of a property over time due to inflation, supply and demand, capital improvements and other factors.  Most real estate investors purchase income property for cash flow and capital appreciation. The real estate investor should therefore have a good understanding of the factors that cause real estate to appreciate in value.  Understanding why real estate goes up in value can help you make more profitable investment decisions.

Leverage

Last but not least L is for leverage.This is the use of borrowed money to increase your profits in an investment.  Building wealth via real estate requires the use of leverage.   Real estate is the only investment vehicle that you can build wealth by using borrowed funds.  Most investors use borrowed funds to invest thus having the ability to acquire more with less .

Five reasons why real estate investing is ideal

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