Why Investing In Real Estate 〔 中 文 〕
As most of real estate investors do they borrow money from banks as much as 80% of the value of the property that they buy for investing. Do you think bank is doing something out of ordinary or something risky? Not at all. Bank is more than willing to lend money for real estate investment because they know it is one of the safest and most profitable investments available. Statistics show that investing in real estate makes a lot of sense. More people have become millionaires owning real estate than any other investment. Many of us know someone who invested in real estate and have become wealthy. Real estate is one of the safest and most profitable means of creating wealth. Here is just some simple reason why real estate makes sense.
1. Proven Track Record
If you look at the average real estate prices you will see a trend where real estate prices continue to go higher. If one examines real estate prices five years ago compared to today you will see that prices are much higher. The same can be said if one looks back 10, 15 and 20 years back, you will find real estate prices have always increased. Just look at the value of your own home. Most likely it has increased from when you last purchased the home. There is an old saying,” invest in real estate and wait, not wait to invest in real estate.” A smart investor once said, "do whatever it takes but buy one property a year and soon you will be wealthy". Real Estate has always been the greatest wealth-builder in history, unlike the volatile stock market where it’s difficult for the average person to make money. Also as the population continues to grow and more immigrants settle in our great country than the demand for real estate will only continue to grow and push real estate prices higher.
Real Estate is a tangible asset and you control when to sell, obviously the longer you keep your investment the great your profits.
With a small down payment you have the ability to own a property with little money down that carries. Leverage, plain and simple, is debt; it's using other people's money to buy, which actually allows you to use less of your own money to get more property. This is what is referred to as the “Power of Leveraging”.
4. Capital Appreciation
Appreciation is the increase in value of a property over time due to inflation, supply and demand, capital improvements and other factors. When rents or occupancy rates increase it translates into higher property values. Occasionally we have hot real estate markets which further push real estate prices higher.
5. Mortgage Reduction
While you are receiving rent each month from your tenant you are actually building equity as your mortgage is being paid down. Over time your cash flow is increasing because your rent is increasing but your mortgage is being paid down.
6. Good Overall Returns
The power of Real Estate investing provides investors with stable rents, increased property values, and tax savings.
7. Predictable Revenue
In the long run the cash flow from the real estate investment provides consistent income during our retirement years.
8. Operating Capital
Real Estate provides monthly cash flow to give the investment the ability to withstand economic downturns or temporary shortfalls.
9. Refinancing Opportunities
The power of refinancing allows real estate investors the ability to borrow against the equity in their properties to purchase additional properties. This simple strategy has made many average people become millionaires.
10. Tax Efficiency
Owning real estate has many tax advantages. Investors should speak to their own accountants to determine the best tax strategy for their particular situation. Real Estate is treated more favorable than other investments and taxes are deferred until property is sold.
Real Estate is a great way to diversify and you still have security, liquidity, and long term appreciation. Which are all the basics of good investing?
Investors can start at their own comfort level, and buy additional investments as they become more comfortable.
13. Bottom Line
Real Estate has a great track record of providing cash flow, tax advantages and appreciation over the long term.