How is investing like self care?
As women, we need to take care of ourselves in many ways. Sisters are doing it for themselves! And one of the ways we can look out for ourselves is through sound real estate investments. Let me share how real estate investing takes care of YOU.
1.) Appreciation –
Despite the recent real estate crash, when you look at real estate over the long haul, it’s accurate to assume some level of appreciation in your real estate holdings. Yes, there are market cycles where values rise quickly or fall quickly, but by and large, real estate is an asset class that appreciates. In addition to this, investors have the ability to research market dynamics and make fairly knowledgeable decisions based on anticipated appreciation for a particular market.
2.) Tax Benefits –
As taxpayers in a tightening tax system, any kind of deduction can be helpful. Owning real estate allows for the deduction of mortgage insurance as well as the depreciation of the property itself. In addition to this, real estate can also afford you the opportunity to defer tax liability by using 1031 exchanges to continue investing funds in new properties while deferring tax liability indefinitely.
3.) Principle Paydown –
A commonly overlooked benefit of investing in real estate is the fact that while your tenant may provide you with positive cash flow above and beyond your mortgage payment, they are also helping to pay down the mortgage as well. While the principle portion of the mortgage payment is minimal at first, every year that you own the property the amortization of the principle amount of your loan speeds up. Before long, you are shaving thousands of dollars off of your loan amount every year until ultimately you own the property outright.
4.) Cashflow – My Favorite!!!
Holding real estate can be a very passive investment that provides returns much higher than could be obtained through other passive investments (ie. stock, bonds, etc.). Cashflow is when your income minus all your property expenses (management, taxes, insurance, debt service) still puts something in your pocket!!
BONUS – Always an Exit –
One of the best characteristics of real estate investing is the plethora of strategies that can be employed when selling a property. Real estate is nice because it doesn’t have to be a permanent proposition. You can own a property for 1 month or 50 years … it’s completely up to you. When it comes time to sell a property, investors can use any number of different strategies to maximize profits. The flexibility is totally advantageous!