Investing In Commercial and Residential Real Estate
We help you secure your retirement
If you need money for retirement, you need to start investing in real estate and when it is time for retirement, we will start liquidating your assets over your retirement period.
Compared to investors who rely on the stock market to accumulate assets for their retirement, real estate investments take a different approach. Real estate appreciation not only continue to appreciate in value over the years, but will also leave you something to pass on to your children.
Real Estate has many advantages over investing in stocks, bonds or mutual funds. Real estate offers predictable cash flow; it appreciates in value, thus keeping up with inflation; it provides a higher return because of positive leverage; and it offers equity growth through debt reduction. During retirement, real estate is a self-sustaining asset while stocks are a self-liquidating asset. Which would you prefer, a self-sustaining asset or a self-liquidating asset?
Reasons to invest in commercial and residential real estate. Security and Peace of Mind will help you secure your retirement.
Real estate has a predictable cash flow
Cash flow is the net spendable income derived from the investment after all operating expenses and mortgage payments have been made. A good real estate investment should provide you with 6% or greater cash flow.
Real estate appreciates in value
Appreciation levels for real estate have been 6 percent per year, including during the downturn in the economy beginning in 2007, according to the National Association of Realtors.
Real estate can be leveraged
The most important advantage of real estate investing is LEVERAGE! It is the use of borrowed capital to increase the potential return of an investment. In real estate transactions, leverage occurs when a mortgage is used to reduce the amount of investor capital required to purchase a property. The annual return on a $200,000 property with a $20,000 net cash flow purchased with cash is 10 percent.
Once you have built up an equity position in an investment property, you can leverage that investment for cash in one of two ways: Secure a second loan against the increased equity or refinance the original loan amount plus the increase equity. This frees up money to buy another investment property.
Real estate provides equity buildup
Most real estate is purchased with a small down payment with the balance of the money being provided through debt financing from a lender. Over time, the principal amount of the mortgage is paid down,slowly at first, and then more rapidly toward the end of the amortization period. This principal reduction builds equity.
Real estate coincides with retirement
When real estate is purchased, the cash flow is lower and the principal reduction on the mortgage is less. Over time the mortgage is paid down, or paid off, and the cash flow increases.
Real estate is tax deductible
Tax codes allow various deductions for the normal expenses incurred in owning real estate, such as property upkeep, maintenance, improvements and even the interest paid on the mortgage. The deductions can offset income and reduce your overall taxes.
Real estate is depreciable
Depreciation is a non-cash expense permitted by tax code that depreciates the value of your investment property over time. However, the value of your investment property actually appreciates. The depreciation deduction allows a real estate investor to generate a larger positive cash flow while reporting a lower income for tax purposes. This creates a higher return than you may initially realize.
Real estate has a lower tax rate
If your investment property is sold after a year, the gain is subject to capital gains tax rates which depending upon your individual tax bracket is usually less than one’s personal tax bracket.
Real estate gains are deferrable
The tax code, under a 1031 exchange, permits the gain on the sale of an investment property to be transferred from the property being sold to a new property being purchased, hence deferring the payment of any tax on the sale of the property.
There is one final advantage to a real estate investment and that it is understandable an easy for most everyone. It’s easy to purchase, it’s easy to finance and there are no insurmountable financial barriers to enter.