Some investors want to own a large portfolio of cash-flowing properties. Others only own their primary residence and don’t consider themselves investors at all. In reality, if you own any piece of real estate, no matter the type, you are an investor.
Let’s take a closer look at the four benefits of real estate investing.
Cash Flow
Cash flow is the big one on which many investors focus. For example, if you own a rental property, you want the rental income to be greater than any associated expenses (mortgage, maintenance costs, insurance, etc.). You aren’t cash-flowing if your costs are higher than your rental income.
Appreciation
Appreciation benefits any and every property owner. It’s likely shocking how much your parents or grandparents bought their first home for versus what the same house is worth now. That is the power of appreciation.
When there is more demand than supply (more people who want to buy property than there are properties available), real estate becomes more expensive as multiple buyers drive prices up.
Tax Incentives
Mortgage interest deductions, insurance deductions, and depreciation are a few of the tax incentives that come with owning real estate. Some only apply to a primary residence, and some are the benefits of owning rental properties.
Your trusted CPA can help guide you on how to maximize your tax savings regarding your real estate investments.
Debt Reduction
Debt reduction only applies to real estate investors who finance their properties. When you use a mortgage, you put a certain amount of money down and then are left with an outstanding loan balance. As you or a tenant continue to pay the mortgage each month, the debt amount shrinks, and the property’s equity grows.
Ready to Become a Real Estate Investor?
Building your team of local real estate professionals is the first step in becoming a real estate investor. Please reach out to Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.
We give out $250 gift cards for referrals that become our real estate clients.
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