7 Reasons I Love Investing in Real Estate
As a CPA in the past as well as a stockbroker, I must say I have been exposed to almost every type of investment that exists. I have had my ups and downs in several of them, many of which have done tremendous and others that have done horrid. Over time, as an investor, it is critical to learn from your mistakes, gain experience and simply become a better investor. And as a result of my experiences, I must say that real estate is simply the best investment for myself. Perhaps in the future it will be for you as well, or maybe it already is?
Below are 7 Reasons Why:
1. Every Month I'm Building Equity
I own approximately 12 properties, most of which have mortgages. Of those 12 properties, the principal payments are approximately $12K. How much equity am I building over the course of the year? Well you guessed it, $144K! Not bad, and even more so as your tenants will be paying your mortgage payment.
2. Cash Flow
My portfolio is cash flow positive, meaning every month, income is greater than expenses. The risk here is if you have vacancies or tenants who do not pay. Otherwise, passive income is a beautiful thing.
3. Tax Benefits
Check with your accountant or CPA on this but more often than not, you will experience some tax benefits with your investment properties. Hopefully there are not some new Obamacare taxes that will derail this benefit which is why I say check with your CPA.
4. Managing Your Investment
Unlike the stock market, you can touch your real estate. You can update it, renovate it, manage it, build up sweat-equity. In the stock market or most other investments, there are so many things out of your control. Obviously the real estate can be very volatile as well as we recently came out of a very tough market (which was also a TERRIFIC market to be buying properties, which we did). With a long term approach and with your tenants paying your mortgage payments, the swings in the real estate market really do not matter too much.
Aha! Appreciation is back. This is a pretty obvious one. Just check with folks you have known for a long time, perhaps your parents or people you know that have built wealth... or a fortune. I would bet that a large portion of that had to do with owning real estate.
6. Pride in Your Community
For all the areas I own properties, I'm also involved with the community. In essence, for every real estate investment that is done right, what happens? The block improves, the neighborhood improves and communities thrive. When you are an instrumental part of that, it is a fantastic feeling.
7. Providing Quality Housing
In addition to the community, of course as an investor what is really going on here? Well, we are providing one of the most basic needs to our tenants, and that is shelter. I have become good friends and have strong relationships with our tenants and do take pride in providing this element for them.
Of course, I'm constantly learning and getting better. For example, in the beginning, I admit that I went "cheap" in doing the renovations and did not realize how important it was to pay more in the beginning to make sure the work is done right. Otherwise, you might find that you have to pay someone else to do it all over again, and then the expenses are more. In addition, a crappy product can mean unhappy tenants. So with our newer investments, the product is crisp, ready for move-in, as I take pride in what I do. Often times that pride can bring more internal benefits than the financial rewards that come over time.
If you are thinking about getting involved in investing and have questions, feel free to reach out to us. We would be glad to help!