Fun fact - some historians say that real estate was one of the first financial products ever created. As such an age-old institution, let’s look at some of the benefits behind this form of investing.
Passive income.
Real estate investing is a great way to earn a passive income because you don't have to do anything once your investment is up and running. If you buy an apartment building, for example, it will continue bringing in money even while you're sleeping or at work. When you invest in a rental property, you're essentially becoming a landlord and collecting rent checks every month. Working with companies like HomeRoom means that you don't have to worry about finding tenants or doing repairs on your own. You'll also be able to deduct expenses related to maintaining the property from your taxes, which helps offset some of your costs as well!
Tax Benefits of Real Estate Investing
There are a number of tax benefits that come with real estate investing. One of the most obvious is depreciation, which allows you to write off certain expenses on your taxes. You can also take advantage of capital gains tax rates if you sell an asset at a profit (and some states offer additional incentives).
Leverage
When buying real estate with borrowed funds (i.e., debt), investors can use their investments as collateral for loans that allow them to buy more property than their own cash would allow--and thus increase their returns on investment (ROI). For example: If an investor has $100K in cash but wants to purchase four properties worth $200K total, he could borrow $100K from the bank against each property at 6% interest rate over 30 years--or 4% per year--for a total monthly payment of about $3,600 per month ($2K per property). This means his ROI would be about 10% annually.
If you're interested in real estate investing but don't know where to start, book an intro call with our team now.