Investing in real estate can be a consistent source of positive cashflow. Real estate cashflow is almost identical to bond coupons and very similar to stock dividends. With real estate investing there are also numerous tax breaks, it is a great hedge against inflation, and a means of controlling your own investment, to a larger extent than stocks or bonds.
The steady return on investment available through real estate offers a compelling alternative to the volatility and unpredictability of equities and bonds. Real estate is a long term investment and is much more secure in the event of economic turmoil having less short term price volatility.
Aside from the price stability and reliability of the return available to real estate investment, there are a large number of tax incentives and you can influence the value of your property with improvements. With every improvement you make to your property, you are not only increasing the potential value of your investment, you are also getting implied tax breaks. The government lets you pay for your real estate improvements without levying any federal taxes and many times state and local property taxes do not reflect these improvements either, encouraging your investment even further. Real estate does hold a few very strong “advanced” tax benefits, including 1031 tax exchanges (only available to real estate) and investing through tax-deferred accounts such as an IRA (exactly the same way as you can with stocks and bonds).
As the property pays for itself with revenue generated from rent and rental rates grow over time, the value of the property appreciates. So when the mortgage is paid off and the income of the property has grown, the average commercial property is worth more than it was when you purchased it.
Investing in real estate allows you to be an active participant in your financial future. Even without tax benefits and property improvements, you can receive strong inflation adjusted cash returns with long term growth, depending on market conditions. Still have questions regarding where to invest your money? Join Mascia Development’s investor list to find out about our latest deals or contact us.