I personally believe buying and holding real estate for the long term is one of the most effective wealth bulding strategies available to the general public and here are my reasons:
1. Appreciation – despite the 2006 real estate crash, when you look at real estate over the long haul, it’s accurate to assume some level of appreciation. Yes there are cycles where values rise quickly or fall quickly, but by the most part it is an asset that appreciates.
2. Passive Income – Holding real estate can be a very passive investmnet that provides a much higher return. With the ability to outsource property management, accounting, etc. investors can still make good returns while playing a very hands-off roll in the investment.
3. High Leverage – Real estate invsting is one of the few investments with the availability of high leverage (ie. financing) Try walking into your local bank and asking for a line of credit for $800,000. secured against only $200,000 of your cash for the purpose of investing in gold or stocks and bons. They would probably laugh in your face. But if you walked into the nk nd told them yo wanted to buy 10 houses $100,000 a pieces they would usher you over into their mortgage department and begin working on your 10 loans.
4. High ROI – with the ability to obtain a very high return on investment. Not only does your monthly cash on cash return go way up when you use leverage. This is because the entire asset appreciates rather than just the amount of money you invested as a down payment.
5. Principle Paydown – A commonly overlooked benefit of investing in real estate is the fact that while your tenant may provide you with a positive cash flow, they are also helping you pay down your mortgage.
6. Tax Benefits – Owning real estate allows for the deduction of mortgage insurance as well as depreciation of the property. Real estate can also afford you the opportunity to defer tax liability by using 031 exchanges to continue investing funds in new properties while deferfing tax liability indefinetely.
7. Hedge Against Inflation – Owning real estae and using leverage (expecially at these low interest rates) is a great way to hedge against coming inflation. If prices rise, so will the cost of housing, owning an addet that rises with the tied is a great way to protect your wealth.
8. Increasing Rents – Most analysts have stated that rents are expected to increase over the coming years. Owning real estae not only allows you to lock in housing prices and interest rates that are at all-time lows, it also provide you with the opportunity to increase future cash flows by increasing rents thus increasing your ROI in future years.
9. Retirement Income – For those investors that look at real estate investing as very long term proposition, the potential o retire on rental income is very real. Over a 20 to 30 year period of time, invesetors can own numerous properties outright and create a net worth well into the millions. Also the cash-flow that can be generated from those properties that no longer have mortgages can be very nice supplements to pensions, social securites etc.
10. Creative Exits – Real estate is nice because it doesn’t have to be a permanent proposition. You can own a property for 1 month or 50 years. It’s up to you. When it comes time to sell a property, investors can use any number of different strategies to maximize profits.
Cape Coral Real Estate if good for you! So am I ! Now is the time to invest in SW Florida Real Estate.
Want “Smoking Hot Deals” in Cape Coral or Fort Myers? Just give me a call Donna Bishop (239) 560-3149