Control Your Investments by Having Control Over Your Investment
One of the great aspects of real estate investing is that you have controls over your investments. At least you can choose to have control of your investments. Seasoned investors who are creating great wealth in real estate choose real estate because they can personally control the outcome. With many investment vehicles you are forced to give up control to stock brokers or perhaps money managers who then manage the funds. Often these funds are growing (or not growing) based on happenings within the marketplace. Outside of our controls, life goes on and stock prices for example respond to the current day's market activities. As market conditions change investors themselves have little control over what happens and no control to make quick changes to the investment strategy. The only real option the investor has is to buy or to sell.
Real estate investing puts the controls in your hands. Markets within real estate change much slower than many investment vehicles do which gives you time to strategize and make corrections which can benefit you and your objectives.
Real estate investing controls:
• Cash flow: How you structure the purchase of your investments can increase or decrease the total outcome of the monthly cash flow. Leverage the property with a loan and you decrease the monthly cash flow but increase the potential to buy multiple properties which in turn will give you more cash flow. Pay cash for the property and you will increase cash flow which may also limit your ability to purchase multiple properties. But the controls are yours.
• Tax benefits; you can also choose to increase or decrease the tax benefits to you. For people who have a huge salary income each year they often are motivated to have as much tax deductions as possible while for others the motivation is different. You can control this in part by increasing or decreasing your depreciation schedule. To increase the tax depreciation you may choose to componentize your depreciation which will accelerate the depreciation and therefore increase your tax deductions.
• Expenses: you can control your expenses and make decisions as to whether an expense will give you good returns or not. As an example if you were to add granite countertops and stainless steel appliances to your rental units will you be able to get enough increased rents to justify the expense. Will this be a good investment or not.
• Income growth: Because you can control the expenses you also have control over your net rents. As long as you are willing to take great care of the property and insure the property management is stellar you can control the growth of the income.
• Equity growth; this is controlled at time of purchase. When you are purposeful and invest in the proper market and within the path of progress and within the sweet spot of a marketplace you have increased your odds of gaining a great equity growth position.
As the old saying goes, (if you want it done right you have to do it yourself) I believe that applies very well in the aspect of investments. No one cares as much about the outcome of your investments like you do yourself. You can certainly buy a passive investment such as a single family or even multifamily property. Hire a great property manager to manage the day to day operations so that you can spend your days enjoying life, but you still will have controls over how your investments are run.