Investing

What Advantages Do I Provide Investors?

If you’re an investor, I’ll use my inherent analytical traits, the skills I’ve learned through education & experience, and my extensive tool set to assist you in crunching the numbers on your potential investments.  I’ll negotiate on your behalf, to help you capitalize on any opportunity you desire & make sure we maximize your return on investment.  After the purchase, I’ll remain at your disposal to provide you continued access to my constantly updated resources for contractors, property management, maintenance, legal & tax advisors, and any other needs you may encounter.  Since I have a great passion for real estate, I don’t anticipate retiring, but if I ever do, I’ll make sure to set you up with recommendations for a replacement who will provide you the level of customer service you need to continue pursuing & achieving your goals.  Here’s a short list of the services I offer:

  • In-Person Consultations, Virtual Meetings, and Remote Closings
  • Educational resources and advice for real estate investments
  • Long-term investment strategy planning
  • Assistance with filtering & narrowing investment selections
  • Number crunching (Calculation of Cash Flow, ROI, CAP Rates, GRM, Debt Coverage Ratios, etc.)
  • Strategic & creative negotiations to maximize returns
  • Continued access to my constantly updated resources for contractors, property management, maintenance, legal & tax advisors, and any other needs you may encounter

If you partner with me, you’ll have my decades of Real Estate, IT and Negotiation experience working for you, to help you capitalize on any opportunity you desire and make sure your decisions align with your current & future goals.  If this sounds like a plan you’d like to pursue, don’t hesitate…..Call Me today!

Why Invest In Real Estate?

The benefits of investing in real estate are numerous. With well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, and diversification—and it’s possible to leverage real estate to build wealth.

Thinking about investing in real estate? Here’s what you need to know about real estate benefits and why real estate is considered a good investment.

KEY TAKEAWAYS

  • Real estate investors make money through rental income, appreciation, and profits generated by business activities that depend on the property.
  • The benefits of investing in real estate include passive income, stable cash flow, tax advantages, diversification, and leverage.
  • Real Estate Investment Trusts (REITs) offer a way to invest in real estate without having to own, operate, or finance properties.

Cash Flow

Cash flow is the net income from a real estate investment after mortgage payments and operating expenses have been made. A key benefit of real estate investing is its ability to generate cash flow. In many cases, cash flow only strengthens over time as you pay down your mortgage—and build up your equity.

Tax Breaks and Deductions

Real estate investors can take advantage of numerous tax breaks and deductions that can save money at tax time. In general, you can deduct the reasonable costs of owning, operating, and managing a property.

Fast Fact

You can depreciate the cost of buildings but not the land.

And since the cost of buying and improving an investment property can be depreciated over its useful life (27.5 years for residential properties; 39 years for commercial), you benefit from decades of deductions that help lower your taxed income. Another tax perk: you may be able to defer capital gains by using a 1031 exchange.

Appreciation

Real estate investors make money through rental income, any profits generated by property-dependent business activity, and appreciation. Real estate values tend to increase over time, and with a good investment, you can turn a profit when it’s time to sell. Rents also tend to rise over time, which can lead to higher cash flow.

*Though the market has experienced some balloons & recessions through the years, overall, the real estate market as a whole has consistently produced an approximate 5% annualized increase over the last 45 years. Given the right choices and due diligence in analyzing investments, that return can be drastically increased. And the best part of all is that appreciation is only one part of your return, as you read above…and keep reading.

Build Equity and Wealth

As you pay down a property mortgage, you build equity—an asset that’s part of your net worth. And as you build equity, you have the leverage to buy more properties and increase cash flow and wealth even more!

Portfolio Diversification

Another benefit of investing in real estate is its diversification potential. Real estate has a low—and in some cases negative—correlation with other major asset classes. This means the addition of real estate to a portfolio of diversified assets can lower portfolio volatility and provide a higher return per unit of risk.

Real Estate Leverage

Leverage is the use of various financial instruments or borrowed capital (e.g., debt) to increase an investment’s potential return. A 20% down payment on a mortgage, for example, gets you 100% of the house you want to buy—that’s leverage. Because real estate is a tangible asset and one that can serve as collateral, financing is readily available.

Competitive Risk-Adjusted Returns

Real estate returns vary, depending on factors such as location, asset class, and management. Still, a number that many investors aim for is to beat the average returns of the S&P 500—what many people refer to when they say, “the market.” The average annual return over the past 50 years is about 11% and, when you add up all these different pieces of the return puzzle which come with investing in real estate, with careful consideration, exceeding that number can be quite common.

Inflation Hedge

The inflation hedging capability of real estate stems from the positive relationship between GDP growth and the demand for real estate. As economies expand, the demand for real estate drives rents higher. This, in turn, translates into higher capital values. Therefore, real estate tends to maintain the buying power of capital by passing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure in the form of capital appreciation.

Real Estate Investment Trusts (REITs)

If you want to invest in real estate, but aren’t ready to make the jump into owning and managing properties, you may want to consider a real estate investment trust (REIT). You can buy and sell publicly-traded REITs on major stock exchanges. Many trade under high volume, meaning you can get into and out of a position quickly. REITs must pay out 90% of income to investors, so they typically offer higher dividends than many stocks. However, keep in mind, with this type of investment vehicle, you’ll have no control over investment or financial decisions which could effect the outcome of your return.

The Bottom Line

Despite all the benefits of investing in real estate, there are drawbacks. One of the main ones is the lack of liquidity (or the relative difficulty in converting an asset into cash and cash into an asset). Unlike a stock or bond transaction, which can be completed in seconds, a real estate transaction can take months to close. Even with the help of a broker, it can take a few weeks of work just to find the right counter-party.

Still, real estate is a distinct asset class that’s simple to understand and can enhance the risk-and-return profile of an investor’s portfolio. On its own, real estate offers cash flow, tax breaks, equity building, competitive risk-adjusted returns, and a hedge against inflation. Real estate can also enhance a portfolio by lowering volatility through diversification, whether you invest in physical properties or REITs.

If you’re willing to put the time and energy it takes into the home or investment property search, I’m willing to guide you every step of the way, furnish you an endless supply of properties to review which will be narrowed down by the specific criteria you’re looking to find, assist you in crunching the numbers, manage all closing tasks to completion, and help you avoid any legal or financial pitfalls throughout the closing process.

Protecting Your Rental Income

There are many things you need to consider when owning a rental property and I can help guide you through them all. Here’s a brief list of some of the areas for which you’ll need a plan to cover:

  • Business Plan
  • Insurance (Renter’s Insurance & Liability Coverage)
  • Tenant Screening Process
  • Legal Advice
  • Tax Advice

Protecting Your Assets

Providing a great space for your tenants, in many ways, will also help you protect your assets.  Consider all of the following when making a real estate investment, to make sure you don’t allow lack of maintenance to eat away at your long-term equity growth:

  • Insurance (Dwelling Coverage, Liability Coverage and/or Umbrella Policies)
  • Home Maintenance (General Contractors, Specialized Repair Subcontractors)
  • Inspectors (General Home Inspectors, Specialized Trade Inspectors such as for Septic Systems & EIFS Siding)
  • Painting & Caulking (This deserves a bullet of its own as this is very important to maintain, for many reasons)
  • Lawn Maintenance (many HOA covenants contain some very specific requirements for lawn & shrub maintenance, but these can also help increase the home’s value faster than other neighborhoods)
  • Education (know your HOA covenants & restrictions to avoid potential fines, lawsuits & conflicts which could eat into your profits)
  • Periodic Inspections (whether you hire a property manager or manage your properties yourself, you should always perform period inspections to make sure tenants are fulfilling their contractual obligations and maintaining your asset)
  • Periodic Financial Reviews (everything changes – your financial position, your lifestyle, the investment location & surrounding properties – so do the match annually or every so many years to make sure your investment is still on track with your goals)