Why Invest in Real Estate
It has been said that more millionaires have been made in the real estate business than in any other business. This is a great reason for you to consider investing in real estate. There is a limited amount of land available on earth. Things that are limited have been known to increase in value. So why not own some of this limited real estate and profit as the value of it increases.
Historically, quality real estate has been a dependable source of income, a great inflationary hedge and a readily marketable commodity. The income produced by an investment property is primarily from two sources: income from the use of the property and appreciation in value over time.
Long Term
In the long term, historically Real Estate property has shown a consistent growth in value, even when some other investment choices were less stable. If there is an increase in value and you are paying down your mortgage balance, its pretty simple: Your increase your equity in the property and add to your net worth. The nice thing about it, if you have purchased the property right and maintained it properly, your tenants, in effect, make your payments for you! In addition, there may be tax advantages available to you when you deal in a long term Real Estate Investment. Although there are definite limits to these potential advantages, they can be substantial.
Because of the stability of the asset (it does not move or disappear) and the continuing need for the product, real estate is easier to finance and is marketable. Furthermore since the benefits of ownership are relatively constant, real estate tends to appreciate at least to the extent of inflation.
While real estate is no longer the tax shelter that it once was, it is still one of the best ways to build wealth effectively on a tax deferred basis. Improvements on real property may be depreciated on a straight line basis over twenty eight years even though typically the property, if properly maintained, is appreciating in value. Additionally maintenance costs are tax deductible. Utilizing 1031 exchanges it is possible to build a considerable real estate portfolio over a period of time. Proper estate planning can tax defer capital gains on real estate across generations.
Short Term
In the short term, Real Estate makes a great investment simply because the numbers are so large. It is not like buying a $200 watch and reselling it for $250. Yes, the return percentage will be high, but you still only made $50. With Real Estate, a decent rate of return can mean big profit dollars.
For more information about Medley Landmarks or any of our investment properties, please contact us.
