Five reasons why most people choose to invest in real property:
Cash flow: — When you buy a property, it will generate Cash Flow monthly for you.
Equity capture: — This means that you purchased the property for $X but it is worth $Y. Equity capture is the difference between what you paid and what you actually make.
Paying down debt: — There is a tenant who lives in the property and they pay your mortgage. You will own the property that was paid off by tenants in ten, twenty or thirty years. You still enjoy the benefits, and it was paid off by someone else.
Depreciation: — This is when the property can be depreciated for tax purposes. This should be discussed with your tax accountant. You can depreciate your asset over time to offset any W2 income. This is called the “phantom laws”.
The biggest one is appreciation — Cash flow, debt repayment, and all other things will all increase with appreciation if you purchase it in the right place.
Appreciation can be amazing
It rises on the East and West Coasts on average every seven to nine year. It will double in value after depreciation. In the Midwest it is every twelve to fifteen year. Consider the place you grew up. What was the house worth 30 years ago? You’d be very rich if you bought the house back then and still owned it today.
The five main reasons why people Invest in Real Estate Property are: cash flow, equity capture and debt pay down.