RESOLUTIONS?
It’s that time of year again. You know, the one where everyone sets goals and aspirations for their year. We ring in the new year with high ambitions and hopes for our biggest year ever but sometimes those goals never get accomplished. At SimpleHouse, we’ve seen the power of real estate investing and how it can transform people’s lives in just one year. That is why we think real estate investing should be on your resolution list.
WHY REAL ESTATE INVESTING?
There are many reasons why people invest into real estate. For most, it’s to create wealth and additional income towards financial freedom. For thousands of years, real estate has been and will continue to be one of the number 1 investment vehicles. Unlike stocks, bonds & mutual funds real estate has a far smaller learning curve while creating a tangible asset that will appreciate over time. Below are some additional reasons why real estate investing should be on your NY Resolution list.
1. Cash flow.
“Many people invest in rental properties simply because of the cash flow - the extra money that is left after all the bills have been paid. The cash flow can provide ongoing, monthly income that is mostly passive, allowing you to spend your time building a business, traveling or reinvesting in more real estate.
Cash flow from real estate is stable and far more predictable than most other businesses. That's great for entrepreneurs enduring the ups and downs of start-up life. The cash flow can help float you though the bad times and live well during the good times.
2. Tax benefits.
Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who get’s to keep more?
That’s right: I do. Because the government rewards rental property owners.
Not only is the cash flow received from your rentals not subject to self-employment tax, the government offers tax benefits including depreciation and significantly lower tax-rates for long-term profits.
3. The loan pay down.
When you buy a rental property using a mortgage, your tenant is actually the one paying the mortgage payment, thus increasing your net worth each month. Because of the loan pay down a rental property is essentially a savings account that grows automatically, without you depositing money each month.
Today you might owe $200,000 on a rental property, but next year you might only owe $195,000 because the tenant is making the payment for you, making you $5,000 richer. Thirty years down the road, or whatever the term of your loan, it's paid down to $0. You own a significant asset that you can sell or continue renting, all thanks to your tenant paying the mortgage.
4. Appreciation.
While the loan is being paid down the value of real estate, generally, goes up. Yes, recessions do happen. Values do go up and down. People buy at the wrong time of the market.
However...
Over time, values do climb higher and higher. That's why people are not in this real estate game just for a year or even a decade but for life. They know their properties will continue to climb so that 30 years from now, everything will be worth far more than they re paying for it today.
5. A hedge against inflation.
Can you imagine paying ten dollars for a gallon of milk? Or five dollars for a candy bar? While those prices seem exorbitant to you, this is the future because of inflation. Inflation is the process by which prices increase due to the value of money decreasing.
While most people fear inflation, as a rental property owner, you will look forward to it!
When the price of a gallon of milk hits ten bucks a gallon, guess what else is going to shoot through the roof? Everything, including rents and property values! The one thing that won’t increase, however, is your fixed-rate mortgage payment. As inflation pushes the cost of living higher and higher, your cash flow will only increase. This is why real estate is often called “a hedge against inflation." When inflation hits - You’re ready!
6. Control.
Many people don’t like their future tied to a board room on Wall Street or a nervous CEO in Silicon Valley.
This is why many choose to invest most of their savings in real estate, knowing that they are the one who is responsible for their success or failure.
If you want a better deal, you need to hustle to find it - or we will find it for you.
If the rental market gets more competitive, you can compensate by increasing your rents.
If values drop, you can choose to wait it out or improve the property to drive the value back up.
In other words, you get to control the situation, and your financial future, with your own two hands.
Don’t think that just by owning some rentals you are instantly going to begin building wealth. Real estate is powerful - but only if you work it right.
You must learn how to find great deals, how to evaluate a real estate investment, and how to finance any properties you want to buy. Additionally, you must treat it like a business and nurture it as it matures. It's likely not going to be totally passive up front, but as millions of individuals throughout history have discovered, the payoff is well worth the journey. “ - Brandon Turner “BIGGER POCKETS” Entrepreneur Magazine
7. Freedom
The positive cashflow from real estate acts like an additional stream of income. Overtime, as you collect more rental properties, the additional cash flow increases. For many investors, their goal is to purchase real estate as a way to supplement or replace their current income and create more freedom to do whatever it is they love. Start the business they have always thought about? Travel the world? Coach their son/daughter’s sports team? Etc.. Whatever is important to you, real estate over time, can give you the freedom to do more of that.
Like most life changing transitions real estate takes time and patience but when strategized correctly it can be transformational.
We hope you enjoyed this post. Please do not be afraid to comment below or message us via our contact page with any questions you have. We hope this information was clear and simple. If you are interested in learning more or adding real estate investing to your 2019 resolutions please let us know, we are here to help. Joshua@SimpleHouseRealEstate.com