Appreciation Potential

• Property Value Increase: Real estate generally appreciates over time, meaning the value of your property can increase, offering significant capital gains when you decide to sell.
• Market Demand: With growing populations and urbanization, demand for housing often rises, driving up property values and enhancing your investment.

Tax Benefits

• Deductions: Enjoy the ability to deduct mortgage interest, property taxes, operating expenses, depreciation, and repairs, reducing your overall tax burden.
• Capital Gains Benefits: Long-term investments in real estate can benefit from favorable capital gains tax rates, making your investment even more profitable.
• 1031 Exchange: A 1031 exchange allows you to defer paying capital gains taxes on an investment property when it is sold, as long as another similar property is purchased with the profit gained by the sale. This can significantly boost your investment potential by allowing you to reinvest the full proceeds from your sales.

Leverage

• Financing: Real estate allows you to use leverage, meaning you can control a larger asset with a smaller amount of personal capital by using borrowed funds.
• Equity Building: As you pay down the mortgage over time, your equity in the property increases, which you can borrow against for future investments (like more real estate!).

Inflation Hedge

• Income and Asset Value: Real estate values and rental income typically increase with inflation, preserving the purchasing power of your investment.
• Fixed-Rate Mortgages: If you have a fixed-rate mortgage, your payment remains the same while rental income may increase, improving cash flow.

Diversification

• Portfolio Diversification: Real estate provides diversification benefits, reducing risk by balancing other investment types such as stocks and bonds.
• Tangible Asset: Unlike stocks and bonds, real estate is a tangible asset that you can see and touch, and it provides utility even if market values fluctuate. You can visit your real estate!

Control

• Direct Control: You have direct control over your investment, from property management decisions to renovation and improvement choices, allowing you to personally impact your property’s success.
• Value-Add Opportunities: Increase your property’s value through renovations, better management, or strategic improvements. Maybe you would buy the property for $300K, and invest $40K in repairs and have the property be worth $385 instead of $340,000! 

Community Impact

• Local Investment: Investing in residential real estate contributes to the local economy and can positively impact communities by improving housing availability and quality.

Long-Term Stability

• Less Volatility: Residential real estate tends to be less volatile than other investments like stocks, providing more stability over the long term.
• Enduring Demand: Housing is a basic need, ensuring ongoing demand regardless of economic conditions.

Personal Touch

• Visit Your Investments: Unlike stocks, you can physically visit your rental properties, giving you a tangible connection to your investments. You can stop by, see the property firsthand, ensure it’s well-maintained, and even meet your tenants. This personal touch not only gives you peace of mind but also allows you to actively manage and improve your investment. We usually stop by a few times a year and bring air filters so we can “eye” our properties.

Cash Flow

• Steady Income: Over time, as you pay down the mortgage and rental rates increase, the properties can generate substantial passive income, allowing you more financial freedom as eventually you won’t have a mortgage on the property anymore!
• Down Payment Impact: Your initial down payment influences your cash flow, and eventually, mortgage rates will come back down, improving your return.