05: Should You Invest in Residential Real Estate?
This week’s weekly wealth widget is sort of no-brainer for most of us. However, if you are still sitting on real estate sidelines, this one is for you. Here are just a few reasons why you strongly consider investing in residential real estate.
- You own a real asset that does not fluctuate on a day to day basis depending on the “mood of the market”.
- People have to live somewhere. This is level 2 on Maslow’s hierarchy of needs. Residential real estate is an investment in something people need.
- There are substantial tax advantages that make most profits tax free. This IS NOT the case if you invest in a REIT so I personally do not recommend that.
- Although the IRS considers your property to depreciate (therefore giving you tax advantages), the property will actually appreciate in most cases over time.
- Your tenants pay down your mortgage. So…while you are collecting money on a monthly basis, your equity position in the property increases over time making your over-all yield higher than simply the cash that you are seeing on a monthly basis.
- You can use leverage…a mortgage to buy an asset and enjoy leveraged appreciation and amplified cash flow.
- Millennials are not buying houses. They prefer to rent. They are the LARGEST generation.
- You can invest in one of many “turn-key” services in various parts of the country essentially eliminating your risk of tenants, toilets, and termites on a daily basis.
- You can invest passively on bigger projects, get great returns, and still enjoy the cash flow and tax benefits as a limited partner without any legal exposure at all!
- Unlike money in the stock market, rental properties do not vanish over-night because of something completely related to your property.
That’s just a few reasons to invest in real estate. If you want more reasons to buy residential real estate, listen to his oldy but goody: 002: The Real Story Behind Real Estate – Wealth Formula