Why Invest in Real Estate?
Chances are if you own your own home now, you may have considered getting into the real estate rental market. Advantages of owning an income producing property are:
- Creates wealth and equity build up over a long term. The tenant makes the payments and pays down the debt.
- Cash flow – Ideally your rental unit not only have enough income to pay for the on going expenses but also enough left over to service the mortgage debt and give you a cash return as well.
- Tax Benefits – Other income can be sheltered by owning an investment property because you can take a paper loss known as “depreciation”. Check with your accountant of course to see what effects if any there are in your situation.
- Relatively low risk – While real estate has had some downturns in California and elsewhere during the recession, time is one big factor in curing a bad real estate investment. If you hold on to it long enough, eventually you will pay off the mortgage debt; own it free and clear with tenants paying rental income to you for your retirement.
- A disadvantage would be that real estate is not a “liquid” investment that you can get out of immediately. In addition, depending upon market conditions, its value could go down like any other investment opportunity.
- Check the next page for the “definitions of Cash Flow analysis” that will allow you to look at any investment property and get some kind of idea as to its potential cash flow and return of your investment.In addition please check out our Property Management page. If you have ever thought about owning investment property but have held back because you don’t like the hassle of dealing with tenants, Professional Property Management may be the answer you are looking for. In the cash flow analysis, we allow for the expense of Property Management. A well managed property not only will maintain a steady cash flow, its value will increase.