Did you know… 9 out of 10 Millionaires in the United States have created their wealth through real estate?
The following are the main reasons that makes real estate the best vehicle to create true wealth:
Positive Cash Flow:
In our opinion, this is the most important reason to buy, fix and rent real estate properties. Cash flow is calculated by subtracting all the property expenses, such as taxes, insurance, and others, from the monthly rental income. Real estate experts do not buy rental properties unless the cash flow is positive. Obviously, the bigger the monthly cash flow, the better the Return On Investment (ROI). this strategy is known as BUY, FIX & RENT.
Create equity by making home improvements:
Sophisticated investors intentionally purchase properties at wholesale prices because the properties could use some cosmetic repairs. The value of the improvements will exceed the cost, which results in an immediate increase in equity. This strategy is known as BUY, FIX & SELL.
Over the years, material things tend to lose value over time like cars, electronics, machines, etc… Real estate on the other hand increases its value over time. Appreciation does not always happen in a uniform way. Some years it might not be noticed, even in some depreciation is possible. In others appreciation might grow 10% to 15%. In conjunction appreciation grows an average of 10% annually. It is very likely that some properties double their value in a ten year period.
Is the ability of controlling an investment through a loan requiring the least amount of out-of-pocket cash and increasing your return on investment. As an example, leverage allows you to buy or control a $100,000 house with only 5%, 10% or 20% down payment.
Inflation increases rental income:
Rents usually increase with inflation, while mortgage payments on the property remain the same. This increases cash flow by receiving more rent income without increased expense for holding the property.
When inflation rises, the affordability of homes is negatively impacted. This increases the demand for rental properties as well as more monthly rental income.
Paying down the loan:
Amortization, or paying down the loan, frees up more investment resources to increase leverage. Investors sometimes use increased equity in one property to free up funds to invest in the next one.
In rental properties, if an investment property is purchased using a loan, the tenants will pay off the debt each time they make a monthly payment.
Depreciation expense is tax deductible:
By buying and holding real estate properties investors have the right to deduct depreciation as an expense when the yearly tax reports are prepared. This is a great way to save significant amount money each year instead of paying it to Uncle Sam. For more details and information it is recommended to ask an accountant.
Can you start to see the power in owning real estate?
Buying your first investment property is the most important step towards creating your wealth in real estate. Once you do this you are in the race! It requires 10 to 20 percent down payment out of your pocket, you can then use the equity on your property to obtain a loan so you can fund your next deal and continue building your investment portfolio.
So, to get started, Click on “Available Properties” above and give us the opportunity to help you find the right investment property in South Florida 40% to 50% under the market value.