Cash Flow From Investing Do Not Include Cash Flows From Benefits of Investing in Real Estate

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Benefits of Investing in Real Estate

There are many reasons why investors are looking at real estate right now. Investing in commercial and/or residential real estate is becoming an increasingly popular venture to generate profits. Entrepreneurs looking for an opportunity to generate healthy cash flow should consider rental properties in their portfolio. Unfortunately, due to the recent decline in real estate values, many people are still shy about inventing in real estate. However, investing in real estate can help you gain more leverage. Real estate is often considered an important investment vehicle where the use of bank money is easy. You can make a down payment and use your capital. This can go a long way in increasing your ROI. Advantages of investing in real estate include:

· Cash flow

Investing in rental properties gives you the ideal opportunity to earn money 24/7, 365 days a year. So whether you are working, sleeping or on vacation, you can expect some money. If you are employed full-time, the rental property will be a supplement to your income. This can help you invest in more properties and once you have more rental income, you can consider quitting your day job or getting a part-time job.

· A lever

Leverage is an important advantage attributed to real estate investing. It allows investors to earn even more value on top of their mortgage. So if you buy a piece of property for $500,000 with a down payment of $100,000 (20%) and the property is expected to increase in value by 3% each year for 10 years, the investment will be worth $650,000. A 3% rate of return per year represents a 15% return on a $100,000 property. Therefore, even in periods of modest appreciation, the actual return on investment is high. A 20% down payment offers five times the rate of real estate appreciation. If you took a 3% loan, it will no doubt be an attractive investment, as it will mean a 100% return on your deposit.

· Tax write-offs

Investing in real estate gives you an ideal opportunity to take advantage of tax benefits. Property owners are entitled to mortgage interest deductions. In addition, you can depreciate the property and deduct any costs to improve the property. Depreciation allows property owners to deduct property assets from the income generated by the property or your personal income evenly over your lifetime. In many cases, depreciation allows owners to profit from the property without paying taxes.

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