7 reasons you want to have real estate in your investment portfolio

7 Reasons You Want To Have Real Estate In Your Investment PortfolioAs you create a certain level of success, you naturally start thinking about your investment portfolio and you look for vehicles to help you maintain your growing prosperity. Perhaps it may simply be that you are like most people, you are getting older each year and the realization is you want to start planning for the future, a time where you can enjoy life without having to work every day. While there are a number of vehicles to consider, here are some very compelling reasons to incorporate real estate into your investments.

7 reasons you want to have real estate in your investment portfolio

1. Tried and true.

Most everything you read about investing shares the common knowledge that better than 90% of millionaires today make their wealth, in whole or in part, though real estate investing. Hard to buck those odds. If it works for the Donald Trumps and warren Buffets of the world, it will work for you too. Even many celebrities and pro-athletes count on real estate investing to protect their large salaries.

2. Cash flow today and tomorrow.

Every month your tenant pays you rent and you pay your monthly expenses. What you have left over is cash flow. The beautiful thing is most of your expenses are fixed and your cash flow (through annual rent increases) should rise to keep up with inflation.

3. Tax deductions reduce your annual tax liability.

Not only can the expenses for your property create tax deduction to offset the income, you can also depreciate the property which adds to tax incentives that can actually assist in reducing the tax liability from your main sources of income. Talk to your tax preparer about this. The most intriguing aspect about investing that my newer clients find thrilling is the savings they make when doing their tax preparation work. To increase the benefit, the more properties you own, the lower your tax liability often becomes (this is a benefit simply not found in other investments).

4. Equity build up.

Indeed there are multiple streams of income (or benefits) from real estate. Here is a hidden benefit most people do not even consider. When you use leverage and finance the property, your tenant essentially makes a mortgage payment for you. A portion of that mortgage payment goes to reducing your principal. This is building you equity each and every month (try getting that benefit from another investment source).

5. Appreciation.

Many consider property value growth to be the number one wealth building principal available today.

6. Leverage.

Unique to real estate investments is leverage, the ability to finance the investment, letting someone else (your tenant) repay the investment while you enjoy the benefits of the appreciation off of this borrowed money, This is so cool there should be a song about it.

7. A self-generated savings plan.

One of the toughest things for people to do is to continually add to a savings plan. Once you generate a down payment for an investment and then use leverage to magnify the investment, you have a self-generating savings plan. The interesting thing I have found with my clients (present company included) is that as you see these savings (your net worth) grow, you become more and more compelled to save more. The speed and size of the savings is indeed much more significant that you can see with a typical savings plan and this is a strong motivator to continue to build that wealth.

If you are thinking of investing in real estate as part of your portfolio, I would be happy to talk with you about this more! Give me a call today... 941-718-7761, Larry Arth.