Portfolio Diversification – Real estate is a physical asset such as gold. When owning real estate you can touch, feel and even see the asset. Why is this so important? When owning stocks, technically you do not own a tangible item. Non-tangible items tend to adversely subject themselves to inflation risks. Owning a piece of real estate can always be monetized through renting or residing in the property, regardless of financial market conditions. This makes it far more resilient against asset market swings compared to traditional stocks or bonds. Real estate tangibility gives investors a level of comfort when other markets are experiencing bear markets or stock sell offs. People tend to pull money out in times of distress and place it within tangible products.
Tax Benefits – As I wrote in detail in my last blog, real estate can be a huge tax shelter if set up properly. Specifically, the benefits that are attributed to deprecation of a real estate asset. Using the associated tax benefits will not only increase returns on that specific real estate investment but could actually increase returns across your entire portfolio. Its important to speak to a professional to properly take advantages of these benefits.
Please see link for my blog entirely on real estate tax benefits
Provides Leverage – One common misconception is the how easy it is to acquire financing for a real estate asset. Depending upon the lending institution you could get 50-90% of the asset financed. This provides investors the ability to leverage the total amount of liquid capital they have to invest and create returns on borrowed money.
Appreciation – Real estate is an asset that can not only provide a solid stream of passive income but has the added benefit of appreciation. There is a reason why people coin real estate as the “wealth Generator”. Over the course of history real estate has proven a consistent track record of outperforming a traditional investment product such as stocks or bonds. There is a fixed supply of real estate, as demand increases the price of the asset will follow suit. I advise all of my clients to select properties that have appealing attributes that people most often seek. Attributes that are most important are: Proximity to good schools, shopping, transportation and proximity to a quality work force. Location, location, location..
Cash Flow/Passive Income – The reason I kept this last benefit of owning real estate last is because it incorporates most all of the benefits above. Smart real estate investments offer cash flows ranging from 4-15% depending upon the market and risks associated with the asset. The more stable as asset or market is an investor should expect to have lower rates of returns. Real estate returns can be amplified by strategically taking advantage of the benefits above. Where else can one receive passive income while leveraging borrowed money, combating inflation and gaining appreciation all at the same time?
For those of you who are interested in learning more of the benefits real feel free to reach out to my self. Over my career in real estate I have accruied a wealth of real estate knowledge that I love to share with others. I take great pride in securing my clients financial freedom using real estate as that Investment vehicle. If you need help finding that personal real estate Investment, Selling/Liquidating your current real estate investment or would like more information, I can be reached at Brian@CasandraProperties.com | (O) 718.816.7799 x110 | (D) 917.886.5304
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