Got Some Extra Cash to Invest?
Why Not Real Estate?
Foreclosures are a great avenue for investors seeking rental properties. Buyers should understand that repair costs are not necessarily large. The Keller Williams Distressed Property Buying Survey shows the average cost to repair to be $5,000—that’s less than 3 percent of the median purchase price in the U.S. today.
Search For Your Investment
Commonly referred to as the 1031 Exchange the Internal Revenue Code section 1031is widely used among the investor community.
The exchange of certain types of property may defer the costs of capital gains or losses due upon sale, and hence defer any capital gains taxes otherwise due. A successful 1031 exchange allows the investor to reinvest 100% of the equity from the sale of a property into the purchase of a preferred replacement property without recognizing any gain.
To qualify, the properties exchanged must be held for productive use in a trade or business or for investment. The properties exchanged must be "like-kind", even if they differ in grade or quality.
With 1031 exchanges, the investor has the potential for financial growth greater than an investor receives by simply buying and selling, with the potential of saving between 15% and 30% or more in taxes because of the ability to defer tax obligations to a later date. Learn more...
Unlike a stock where the only measurement of a return is the price increase of the equity, there are other factors, which contribute to the overall return in a real estate investment:
Property Appreciation - often the largest return on a long-term hold asset which is held with the intention of producing rental income. This appreciation is tax free, until sold, and then it is usually treated as capital gains.
Principal Reduction of Mortgage - adds to the equity but is paid by the tenant in the form of rent.
Positive cash flow - could be negative to very positive or even substantial especially in recent years. Normally, you want to have positive cash flow from day one but often you will need to re-invest all the cash flow into the building in the first 9 to 15 months after acquisition to improve the building, and thus the value one to three years down the road.
Possibly, tax losses in year one or two of a venture - This figure is usually 0 in a joint venture, but could be a small amount in a limited partnership scenario (dont invest in a venture where the key benefit is a tax loss! Always, always treat a possible tax loss as a bonus and dont include in your calculations).
Tenants pay down the mortgage - which increases your return and essentially buys the investment for you. Each time your mortgage is reduced, your investment return increases. Even though you’ve only put up a portion of the cost of the entire investment, you benefit from the entire growth of the property value.
Rental income is a great way to hedge against inflation as it increases with inflation, and in most cases at a quicker pace important in the future as Canadian interest rates and thus inflation may rise in the latter half of this decade
Owning 5 or 6 properties, can generate a substantial monthly income that will continue to increase with your life expectancy.
The property can be managed for you – there are no property management hassles (this is a major reason why many people shy away from real estate investments)
Unlike real estate, the only measurement of return on most stocks is when its price goes up. To generate income from a stock or mutual fund, the investment must be sold, unless it is a dividend rich stock.
Real estate produces income each and every month while at the same time the mortgage is usually paid down while the value of the property usually increases and it is inflation proof and it is a good investment even if the economy is flat or declining there is always a demand!
Open Road 3X is the top choice for real estate investors, agents, and entrepreneurs who need to GROW their businesses in a big way. Thousands of real estate investors use Open Road 3x, the World's most powerful and complete real estate investing business management platform, to run their business. Check it out =>
