Investing in Real Estate

By
Real Estate Broker/Owner with American West Realty and Management 12599

Investing in Real Estate: Is It For You?

In my mind, and in my personal experience, there is no better investment than real estate! Here are just a few of the reasons:

  1. Control. When you purchase stocks, bonds, mutual funds, CDs, or your company 401K plan, you put money into it but you can't do anything tangible to affect the growth of that product. For example, you could pour tons of money into Coca Cola and then buy Coke products like crazy, but you would have little affect on the value of Coke and end up with diabetes! Put that same money into a house and you can affect the value of your investment by improving curb appeal, new paint and flooring, renovating the kitchen, etc. You can't control the overall housing market, but if you buy smart, you can weather any storms.
  2. Value. When you purchase a stock valued at $10 a share, you pay $10 a share. You can't find bargains where someone will sell you those shares for $8 each or even $3 each. With real estate you can create immediate equity and cash flow by purchasing below market. Let's say you find a 3bed/2bath home valued at $200,000 but the family is desperate to sell (pre-foreclosure, divorce, etc). You buy it at $160,000 and immediately create $40,000 in equity. Real Estate investors are always on the lookout for deals and can often gain 20% - 50% equity at closing!
  3. Leverage. You put down $30,000 on a home and gain control of a $150,000 asset. If you bought well below market, you can put down $30,000 and control a $200,000 asset. Then you gain the value added by a tenant every month when they make the mortgage payment for you!
  4. Taxes. You get to deduct mortgage interest payments, as well as operating expenses, property taxes, insurance and depreciation. How do the wealthy get away with paying so little in taxes? They write off major deductions like mortgage interest. Real estate enables you to build major wealth without a major tax impact.
  5. Inflation. Rental prices and home values tend to rise with inflation, which helps protect your value. Stocks and other investments can be very volatile, losing 10 - 15% in a matter of days. Real estate does fluctuate, but it tends to have minor fluctuations compared to other investments. But while property values may drop, rent rates will tend to hold steady so your tenant is still paying your mortgage! All you have to do is ride out the storm and the market will recover and then start growing again.

Want to learn more?

There are many more reasons why real estate can be a great investment. If you are interested in learning more, contact us today and we can help point you to some great resources that will educate you and give you the solid foundation you'll need going forward.

Comments (14)

Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

Good basic overview and points made here for future investors to consider. We just interviewed a top investor on our Podcast: Mark Walker from Luxmana Investments gave some great advice in this broadcast last week...

Podcast Episode #79: Real Estate Investing with the Big Boys!!!

Jan 25, 2017 10:54 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Nathan what a Feature Worthy post I hope the gremlins pick it up, Endre

Jan 25, 2017 11:02 PM
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Good morning Nathan.  I would never make a landlord.  I see all to often of what people can do to a place.  However, I applaud those who can separate the two.

Jan 26, 2017 02:20 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is very good advice to share with prospective real estate investors.

Jan 26, 2017 04:19 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

It take a special mindset to be an investor, especially if it involves tenants.  Not the type of thing for people that have too much heart

Jan 26, 2017 05:50 AM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Nathan.  Great advice for those considering investing in real estate.

Jan 26, 2017 06:14 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Nathan Gesner,  Pros and Cons in investing in Real Estate, If I only knew in 2009 what I know know, I would of invested lots of money back then.

Jan 26, 2017 09:13 AM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Thomas J. Nelson, Realtor, CRS I'll try to check it out in the next day or two.

Endre Barath, Jr. thanks for reading and commenting!

Jan 26, 2017 02:55 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

James Dray That's why investors hire a professional property manager to handle it themselves. I know many investors that are won't even look at properties unless they can make a minimum 12% return but most are making much better than that!

Roy Kelley thank you for commenting!

 

Jan 26, 2017 02:57 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Ed Silva That true, but that's why God created property managers!

Gabe Sanders thanks for commenting.

Will Hamm If I knew then what I know now, I would have been jumping in with both feet. But there's no time like the present!

Jan 26, 2017 02:59 PM
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Considering the tariffs that are coming and the deportations that are also coming I am buying as much investment property as possible this year.

Feb 24, 2017 05:53 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

I'm with you, Joe Pryor , but for different reasons. I'm seeing more good deals this year than I've seen in the past four. It seems a lot of mom-and-pop investors are unloading and I'm trying to pick them up. I just need more money!

Feb 24, 2017 05:56 PM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

One needs to have a vision and able to find properties within budget. Not very easy here since home prices have apex so much.

Feb 24, 2017 10:21 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

The rising prices make it much harder than it was during the crash, but there are still deals to be found, Sam Shueh ! 

Feb 25, 2017 07:31 AM