(To read the prior posts regarding Real Estate Reasons To Invest select the desired post: 1-2, 3, 7-10.)
Number 4
Depreciation. You’re able to depreciate your investment property year after year, even if the value of the asset is increasing. This can significantly affect your annual tax situation. By owning enough real estate you can significantly reduce the taxes you owe, and own a on property that is putting money into your bank account. To maximize this process and better understand this strategy you should be consulting your tax professional.
Number 5
Maximum Flexibility. You have maximum flexibly of what you can put in a real estate agreement. For example if you are unsure of the quality of the deal or have reservations about certain areas of the contract, you can include a clause that allows you to run it by your attorney or other professional before committing to going through the purchase.
You may also be interested in making repairs or improvements to the property before actually closing on the deal. What would be the advantage to doing this? Well as we discussed in one of the earlier points, improvements often increase the value of the property in an amount greater than the improvement. An example may be, if you have a home that you have an agreement to purchase for $200,000, and go in an make improvements increasing the value to $230,000, then you are buying the property with a nice already established equity position.
Number 6
Equity Use. You can access the increased value of the real estate without needing to sell the asset. Meaning you can pull the equity out of a piece of real estate simply by getting a second loan or line of credit. The key to this strategy is to put the new available equity to work making you more money vs. spending it on a boat, new entertainment center or other doodads (for those of you who are Rich Dad, Poor Dad students).
While there are many more than just 10 Reasons Why I like Real Estate As An Investment, I’ll only mention 4 more.
