“What are the benefits of investing in real estate?”
This is the first and most frequently asked question from individuals looking to get more involved in investing. The most common benefit of owning real estate is building equity. For example; think about when you bought your first house and had to fork out that downpayment, or perhaps you needed to replace the roof after one year. Painful right? But then you remind yourself those aren’t sunk costs because it builds equity! Well, this is the case for commercial real estate as well. But there are so many more reasons to embark on your real estate investing journey, most of which school doesn’t teach. So let’s touch on some of the greatest advantages and benefits:
Equity – In Real Estate, your equity grows over time as debt gets paid down. Healthy assets not only result in increased equity, but also more profit as rental income covers both debt and expenses.
Cash Flow – One of the most common benefits of passive Real Estate investing is cash flow. You receive actual disbursements, real cash in your pocket, without having to do any extra work.
Appreciation – When we invest in value-add assets located in strong markets, we force appreciation. This drives up the value of the asset, which in turn increases your future equity payout at refinance or disposition.
Diversification – Real Estate is a diversification strategy in and of itself. But there’s more. You will leverage our team’s expertise and boots on the ground, which provides you the opportunity to spread your investments across markets and asset types, with no additional effort.
Hedge Inflation – Relative to other asset classes, Real Estate has historically performed very well during inflationary periods. As operators, we have the ability to raise rents yearly, which can level out with inflation over time, increase property values and maximize cash flows.
Tax Advantages – Real Estate offers a wide range of tax advantages through accelerated depreciation and cost segregation studies which aim to maximize deductible amounts as well as the ability to re-deploy capital from Real Estate proceeds into other investments, without being taxed.
These are just some of the great benefits that can be achieved through real estate investing.
As always, we hope this is insightful. If you’re interested in learning how to invest or discussing some of our current investment opportunities, don’t hesitate to reach out!
Mitch & Kevin