Real estate investments can take on different benefits that make investing significantly profitable, including: cash flow, tax benefits and more value for sale.
Here are the 3 reasons to invest on real estate:
Cash Flow
Rental properties when purchased correctly generate significant cash flow. If purchased with 100% cash then the cash flow is going to approximate the cap rate and that rate tends to run between 5-10% depending on the type of property and where we are in the real estate cycle. Currently many properties are able to produce numbers near the high end of that range or even above it. These are very strong numbers. Remember that this doesn’t count the appreciation of the property. This is just cash that you put into your pocket every year; cash that is not all taxable due to deprecation; cash that will be generated reliably year after year with no significant reduction, but slow consistent increases. Source: FreeMoneyFinance
Tax Benefits
Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who gets to keep more?
That’s right: I do. Because the government rewards rental property owners.
Not only is the cash flow received from your rentals not subject to self-employment tax, the government offers tax benefits including depreciation and significantly lower tax-rates for long-term profits.
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