4 Reasons Why Real Estate Builds Wealth


4 Reasons Why Real Estate Builds Wealth

There seems to be a divide, almost political in nature among investors. Stocks vs. Real Estate. Arguably, it is probably best to diversify and have a good spread based on your own goals and situation about what investments you choose. This is a basic run down about why Real Estate can be a good vector to build wealth FAST.

  1. Cash Flow

Buying properties at the right price in the right market will provide you with monthly income. Obviously, parts of this has to be budgeted for Repairs/Maintenance and CapEx (BIG repairs). However, not many jobs or side hustles can immediately start bringing in $500-$1000/month.

2. Equity

Every month you are (or your tenants are preferably) are forced to stash away your mortgage into an investment similar to a savings account. Over time, you start paying less interest as that principal is being eaten away, month by month and year by year. This investment is very illiquid and unless you sell or re-finance its hard to get that cash out! Which is probably a good thing for most Americans, since dipping into your savings account is as easy as clicking a button on your phone.

3. Appreciation or Forced Appreciation

In certain areas, the ‘icing on the cake’ is the appreciation your building might obtain. New schools, coffee shops, other apartment buildings are being built and making YOUR land more valuable. If you are in an area where none of these things are happening you can MAKE your own appreciation by renovating, remodeling, etc… and reaping the benefits with a higher rent.

4 .Tax Advantages

With a new tax bill, there are still some areas we are figuring out. But overall, owning real estate can be hugely beneficial in terms of the depreciation you write off every year for the building. Real estate is a semi-business and luckily, in America we are rewarded for being entrepreneurs and taking on responsibility to provide a PRODUCT to consumers, in this case housing.

Real Estate is an avenue where you have control over your investment whether that be buying at a certain time in a certain place, versus getting a tenant in, etc… and it can pay off immensely month-to-month and most certainly once that loan is paid off!

If you want more control of your investments other than just paying a day trader consider learning more about Real Estate. Check out BiggerPockets.com for more info.