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5 Reasons Why You Should Invest in Real Estate

Aug 23, 2007
Why is real estate investing the best wealth builder in the universe? The answer is simple: Everyone needs a place to live, and their values usually go up over time.

I can assure you that, in the next 20 years, your real estate property will probably double, triple, perhaps even quadruple in value. If you are in a hot market, it might even go up 10 to 20 times.

When is the time to get into real estate investing? Yesterday. Real estate increases its value to build wealth, but there are other reasons why property investing, compared with any other investing, is the best.

Here are five advantages of investing in real estate, the best wealth builder in the universe, as it leads to wealth for you.

1. Real estate increases your net worth.

One of real estate's biggest advantages is how it can increase your net worth instantly because you can buy property below market value. For example, if you find a property that is worth $500,000 and a motivated seller who is willing to let it go for $300,000, you put it under contract for $300,000 then borrow all $300,000, close the deal, and become the owner of this property.

You borrowed all of the money to make this happen; you did not use your own. The minute you own this property, your bank and your financial statement say you have an asset worth $500,000 and a $300,000 loan against it. Your net worth just went up $200,000.

2. Real estate generates income from holding properties.

Rental property (a house, commercial property, or an apartment building) is unique because your tenants pay off your debt on that real estate. If you own rental property with $500 monthly mortgage payments and $800 monthly rental income, you may earn a lot more.

3. With real estate, you can pay less than what the property is worth.

By looking for deals, you can buy real estate that is priced at 20 to 50 percent of what it it is worth. This means you seek $100,000 properties that you can buy for, say, $70,000.

Compare that with the stock market. Can you find stock that is worth $100 and pay $70 for it? No. You pay $70, the market value, then pray it goes up to $100. It could hold at $70 for a year, then go up, or it could go down because that's the nature of the stock market. You cannot buy stocks below market value like you can real estate.

4. Real estate offers tax advantages.

The third big advantage of real estate investing is how it affects your tax obligations. If you have a traditional job with a traditional paycheck, you are entitled to very few tax write-offs or deductions.

However, in real estate or any business you own, you can write off a wide array of expenses, including phone calls and a portion of your business meals. Owning real estate provides the opportunity to write off most of your mortgage interest and property depreciation.

5. You do not need cash or credit to get into real estate.

In the stock market, you require most or all of your cash up front to purchase stocks. If you want to buy a $100 stock, you have to pay $100 cash. Some banks or brokerage houses will lend you half of the money to buy stock, but you will still have to come up with the other half.

During my first several years of real estate investing, I knew of only one way to make money in real estate-buying and holding; that is, buying and renting property, and collecting rents.

Then I learned about flipping, lease optioning, referring contractors and legal services, and so on. I started getting little checks, then medium-sized checks, and finally big checks.

You can do the same. All you have to decide is how many checks you want from how many sources. Open your mind to not only one, two, or three avenues of income, but to multiple avenues of real estate income. Start with one way and, as your career progresses, you will want to add more.
About the Author
Adrien Brody ( http://propertysmarty.com ) is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. To take advantage in managing your investment, make sure you visit http://leasepurchaseinvestment.com
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