4 Financial Incentives for Investment Real Estate

4 Financial Incentives for Investment Real Estate

There are thousands of reasons to pursue real estate as a means of wealth-building: be your own boss, set your own hours, do WHAT you want and WHEN you want and the list goes on.  At the end of the day, all answers boil down to one core principle: no one wants to live paycheck to paycheck.  

As Warren Buffet has been known to say, “Why?  “Real estate cannot be lost or stolen, nor can it be carried away.  Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world,” according to Franklin D. Roosevelt.

When you think of all the frivolous risks you take on a daily basis throughout your lifetime, there’s really no valid reason NOT to consider real estate as a means of wealth building.

Here are 4 ways you can elevate your financial position via real estate investment(s):

1. Tax Benefits:

The purchase of just one property offers you a world of tax savings, strategies, and perks.  For example your phone bill, home office, office supplies and equipment, and pretty much anything you use for business purposes related to your rental property likely qualify for “write-off” status.  Of course, you would need to consult your accountant for verification, however, most of what you already own and that which you already utilize on a daily basis could afford you a myriad of write-offs.  

2. Amortization:

In most cases, good investments which are well-priced and properly managed can be paid off by your tenant.  This means that the monthly rent should cover all necessary fees, including property management, and still yield a profit at the end of each month.  This is called “loan amortization”. 

Related: Hope for Big-City Investors

3. Bottom LIne:

Cash flow, of course, is the most important factor in all of this.  Smart investments will yield a strong cash flow most of the time, largely because there will be “surprise” expenses at some point in the life of the property.  For example, a property that is known to collect approximately $800 monthly should bring in at least $8,000 annually in cash flow.  This might not seem like much when you consider the work that is involved, however the knowledge that someone else is paying off your mortgage should boost your confidence in knowing that you will soon start building some serious passive income, thus increasing your financial means and/or portfolio significantly.  

4. Appreciation for Appreciation:

Purchasing a good investment in the right zip code means that you are inevitably going to experience some serious appreciation, your home equity will rise and more money will start finding its way into your bank account.  Did you know the average property increases in value by three percent annually?  For example, you purchase a property at $100K.  Factor in that three percent annual appreciation and the value has more than doubled in thirty years as the property is now worth $235K+ if you play your cards right, performing necessary maintenance and updates over the years; it could actually be worth far more!

Related: 6 Reasons Multifamily Properties Are Picking Up Steam

If those are not reasons to start moving forward, then sit down with an experienced investment realtor to talk serious numbers and options.  You might be surprised at what is waiting for you!

For more information, contact The Aitken Home Team today!

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Phil Aitken, Owner/Broker
Phil Aitken is the Owner/Broker with Your Home Sold Guaranteed Realty - Phil Aitken Home Team and has over 13 years of Real Estate experience. Phil’s faith and desire for his family’s continued security fuel his business growth and leadership. The Phil Aitken Home Team continues to profoundly impact the people of Jacksonville via supporting several faith-based organizations. Phil gives back a portion of every real estate transaction to The Tim Tebow Foundation and Rethreaded. Find Phil's full story here.