Six Major Benefits of Real Estate Investing
By Alan Rosenthal

Accessible: Real estate is relatively easy to understand and purchase, especially when investing in single family houses. Most of us have a good concept from purchasing the homes where we live. Having a mentor, reading books on real estate investing, going to workshops and seminars can all be great ways to become familiar and more comfortable with the process.

Appreciable: Real estate increases in value over time. Over the last 30 years real estate has appreciated at an average of 6.1% per year. That’s huge when you factor in leverage (see below). If you look back 10 or more years ago, you’ll see that it would have been hard to find a property in the US that you would not have benefited from today.

Great Tax Benefits:
1. Deductible: With investment property, everything but the principle portion of your payment is deductible. This includes repairs, interest on the loan, travel expenses to see your property, the list goes on.
2. Depreciable: Even though your investment property is increasing in value, the government will view the structure (not the land) as depreciating. For example, if you have an investment house worth $275,000 the government sees it as decreasing in value $10,000 per year for the next 27.5 years. So if your AGI (Adjusted Gross Income) is $90,000, you can take $10,000 off the top of your taxes. This can put a few thousand dollars directly into your pocket instead of Uncle Sam’s. Now imagine how much you would save if you have 6, 8 or 10 houses.
3. Deferrable: By doing a 1031 exchange you can sell a property, buy one or more properties with the proceeds and defer the taxes indefinitely.

Instant Equity: If you buy a foreclosure at a discount, it’s possible to purchase it for 10% to 20% or more under fair market value. Let’s say you buy a rental house with $10,000 down plus closing costs. Because you bought it under value you could have $30,000 equity in the property the day you close escrow. That’s an instant profit of $20,000. Good luck asking your stockbroker for a 10% or 20% discount with your next stock purchase.

Using Leverage: Leverage is important when purchasing real estate. We might put 10% or 20% down and have the bank front the rest. See if you can think of any other investment where you can say, “Hi Mr. Banker, I’d like to put up 20% of the money and you pay 80% – but I want all the tax benefits and all the appreciating value!”

Rentable: Over the last 30 years rents have gone up an average of 5.2% per year. This cash flow provides us with a steady stream of unearned income. That is income that comes not from our jobs. We can spend the extra money, invest it by paying debt on the property or use it to purchase additional property.

To learn more about how Real Estate Investments can help secure your family's financial future, go to Dr. Alan Rosenthal's website at http://www.FinancialHealthRealEstate.com where you can find more great investment information. And while you're there, please sign up for your FREE Financial Health Real Estate Starter Package full of tips, newsletters and much more. Plus, you are cordially invited to attend one of his real estate investment workshops by visiting http://www.FinancialHealthRealEstate.com/upcomingevents.html For additional information listen to one of Dr. Alan Rosenthal’s investment talks at http://www.FinancialHealthRealEstate.com/Investmenttalks.html

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