If you look at the top ten percent of the wealth in this country, over half of it is because of real estate. So why is real estate so lucrative for people? Why do people love investing in it? Here’s eight quick reasons why.
1. Cash Flow
The number-one reason you would want to invest in multifamily apartments or any kind of real estate, , is to provide cash flow. Again, this doesn’t pertain to owning a home. The dumbest move people make, by the way. Owning a home doesn’t make you any money. It doesn’t provide you with monthly cash flow. People would try and argue that you can have equity in a home, but that value is locked to your home. You can’t get it out and use it for yourself unless you sell your house. Taking a home equity loan is just that, a loan. A scam by the banks to make more money off the dream of home ownership that they sold you in the first place!
2. Multiply Your Money
Number two, you want to multiply your money? Buy real estate. Investing in real estate is the only time that you can buy something of greater value without putting all your money down. For example, if you want to buy a million dollars in stocks, you have to have the entire million dollars to do that. Buying a million dollars of real estate, you only need four hundred thousand to do that – or less!
3. Low Cost to Debt
Commercial real estate, property owned to produce an income, has access to amazing funding opportunities. Many times, you can get interest only loans and other incentives that you can’t get when asking for a residential loan. Your loan on multifamily is based on the income the property produces instead of the income you produce like what is used to qualify you for a primary residence mortgage.
4. A Hedge Against Inflation
Money sitting in a bank is basically decomposing. It’s not making you anything, and in fact is costing you. It costs you because the paltry amount that it earns in interest is far outpaced by the current rate of inflation which makes your money worth less than it is now. The goal of money is to get rid of it as soon as possible. Convert it to something that is a real asset and can appreciate in value.
5. Physical Asset
Real estate is real. It’s not a piece of paper. It’s not gambling on something that may or may not happen. It won’t disappear or be destroyed. It’s tangible. Even if the property on top of the land is gone, the land will be worth something.
6. Tax Benefits
There are so many benefits. When you sell your property and reinvest the proceeds your tax is deferred. You can keep doing this for all time. The amount of deductions and depreciation you can claim is also astronomical. The commercial real estate deductions are far superior to what you can deduct on your taxes for your one mortgage.
7. Asset Appreciation
There is a chance that these assets will go up in value. Now, the way, the reason I believe multifamily is the best investment in the world today is because I think rents will continue to appreciate and if they continue to appreciate what that means is the value of the property will go up. Again, this is very different from a home appreciating in value because that is dependent on neighboring homes, not the income the property produces.
You actual own something. It is yours to control. When you buy stock in the company, you don’t control how they run the company, what they set their pricing at, how they market it – you are at the mercy of the board of directors and the CEO. When you buy real estate, you run the show. You decide the rental price, you decide on what improvements you want, you decide all of it.
You should be investing in real estate. Everybody should be doing this thing. It’s going to be the best investment in the next 25 years. Everybody should be in the game. Take the time to do it. Set your money aside. Don’t give that money to the bank. Prepare for that money to grow.
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