If you’re looking to build wealth, increase your net worth, and create monthly cash flow, there’s no better investment vehicle than long-term, buy and hold real estate. When done correctly, investing in real estate yields a high profit, stable income, on top of numerous other benefits.
On this episode of Investing in Real Estate, I’m going to share the top 10 reasons to invest in real estate. You’re going to learn about streams of income, tax benefits, and so much more. Click play to hear 10 reasons to buy rental properties!
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1) Leverage. Can you think of any other investment type that allows you to use the bank’s money to build your own wealth? This is incredibly powerful because you can get four to five times your buying power on the dollar! There’s no other asset class that allows you to harness leverage in this way.
2) High returns. Real estate investors earn four streams of income, and I’m going to walk you through each one. But first, here’s a quick summary: appreciation, principal reduction, tax benefits, and cash flow. Together these four streams of income create double-digit returns in ways that are simply not possible with other asset classes.
3) Appreciation. Appreciation refers to a piece of real estate growing in value over time. While I’m not one to invest primarily for appreciation, I do think it’s important to touch on its benefits. As a long-term buy and hold investor, appreciation is powerful because it allows you to slowly and steadily build your net worth, and allows you to further leverage your properties along the way.
4) Cash flow. Let’s dive into a simple definition. Cash flow is rent minus financing and expenses. When you buy an investment property, the goal is to be cash flow positive.
5) Principal reduction. Every time you pay down the principal you are building equity, and reducing your overall debt. This means less paid in interest — ultimately reducing the overall life of your loan.
6) Tax benefits & depreciation. The tax benefits of investing in real estate are unmatched. One particular tax deduction, depreciation, allows you to keep more of your dollars in your pocket. In fact, you get a deduction not only for the money you’ve invested in your property, but also the money the bank has invested.
7) Rent increases. We’ve seen the prices of nearly everything go up in recent years… and rental rates are no different. If you’re looking to increase rents, be sure that you’re working with your property management company to do so in a fair, strategic, and timely manner that’s supported by metrics in that specific market.
8) Protection against inflation. Did you know that inflation actually benefits real estate investors? Historically speaking, owning investment properties is a great hedge against inflation.
9) Less risk & volatility than the stock market. Because real estate is a tangible asset, by nature, it comes with less risk and volatility than the stock market. Real Estate vs. Stocks: https://bit.ly/3UNi7sg
10) Freedom. The best part about investing in real estate is that it allows you to build a customized plan. You can build consistent passive income that supports your living expenses and allows you to live your best life, however you define that. Freedom Cheat Sheet: https://morrisinvest.com/freedom
Episode Resources
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How to Invest to Overcome Inflation
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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