The incredible, non-edible, nest egg
What is it that makes real estate such an attractive investment? Veteran investors may already know this, but new investors sometimes need to convince their friends and family that the perceived risk of real estate investing is offset by the many benefits. This article in Forbes gives a great breakdown of the reasons why it is worth pursuing this real estate “thing.” Here are the many ways real estate can put money in your pocket:
- Cash Flow – the ability to retain profit after expenses have been paid (by someone else). Most investments require appreciation, but real estate can make money even when there is no appreciation.
- Appreciation – the ability to make money without doing anything except holding onto the asset. There is no guarantee that a property will appreciate, but they generally do over the long run.
- Depreciation – the government gives you a tax break simply for providing housing to others (so they don’t have to, which is better for everyone).
- Leverage – this is the ability to use other people’s money (OPM) to acquire assets that you control and profit from. You can start investing in real estate with very little money as long as you understand how to structure the deal.
- Loans paid down by someone else – When the tenant pays the rent, you don’t have to! When the loan goes away, you have an asset that cost you relatively very little and continues to grow your portfolio.
- You can force equity (a.k.a. add value) to your asset – you can improve a property in a number of ways, like kitchen remodels or adding bedrooms and bathrooms. The extra equity can be used to acquire more assets.
- Inflation protects the value of your asset. Whether you rent the property or plan to sell, prices generally go up in the long run (and sometimes in the short-run like we saw in Denver recently).
These are all the POTENTIAL ways to make money in real estate. There are also many ways to lose money. Therefore, make sure you take the time to learn the right way to create wealth and pick a strategy that you enjoy. Invest Success and the John Fisher Breakfast Club are here to help you make the right investments.
Colorado Springs still hot
The Denver metro housing market may be cooling down, but Colorado Springs is expected to continue growing and may even take the No.1 spot in the nation if predictions hold true. The prediction is based on job growth, tight rental supply, affordability of entry-level homes, a millennial population to buy those entry-level homes and internet searches of people wanting to relocate there versus move out.
QUOTE OF THE WEEK
“One that would have the fruit must climb the tree.“
See you soon,