A long career in real estate has taught me about the amazing opportunities that exist in real estate investing.
I have always said that investing in real estate is a time-tested investment strategy.
It worked for your father (or mother), and his (or her) father, and it can work for you, too.
“If you are going to live somewhere, invest there.”
This is a perfect time to consider real estate as a long-term investment. It’s one of the best investments you can make and can provide you with income in your retirement years.
When I talk about investing in real estate, I find myself hitting these three points…
POINT #1: REAL ESTATE PAYS THREE WAYS
When you purchase a duplex or a home in order to rent it, you are making money three ways:
- The rent the tenant pays you
- The mortgage your tenant is paying for you
- Appreciation
Let’s say you purchase a rental property for $150,000 and your mortgage on that house is $650 per month, including taxes. If you rent that house for $1,000 per month, obviously your profit is $350 per month.
But that isn’t the only payoff.
Someone else is paying off the mortgage for the rental while you are essentially saving $350 per month on your own mortgage payment.
Over the 30-year life of the loan, your payments stay flat, but the amount you will be able to charge for rent will increase, adding to your profit.
AND, as long as property values increase, when you sell that property for say, $175,000, you have made an additional $25,000. BONUS: Since your down payment was the only money you spent out of your own pocket, when you sell your property for a profit, the return on your original investment is even higher!
There are many other benefits, and your accountant can give you all the details, but one more to consider: tax deductions. Any improvements you pay for are deductible on your tax return. Carpet, paint, a new roof, etc., all end up in your favor on your tax return.
POINT #2: BETTER YOUR COMMUNITY
We are all looking for ways to make our neighborhoods and communities better. Investing in real estate is literally investing in the place you live.
If you are going to live somewhere, invest there.
By the way, you don’t even have to manage a rental property yourself. You can hire a respected property management company to do the dirty work. Adding multiple rental properties to your portfolio can provide retirement income without selling your initial investment to receive the benefit.
POINT #3: YOU CAN TOUCH IT
A real estate investment, or many of them, gives you something you can see, touch and feel.
Many investments are on paper, or on a spreadsheet somewhere.
Rental property is right there where you can see it.
Demand is high for rental property. When you invest in real estate, you help meet that need.
Most people need cash flow when they retire. That can be done with real estate.
Wondering where to start? I recommend single family residences or duplexes. Some people rent one half of a duplex and live in the other unit. You can purchase a single unit as large as a fourplex and remain in a residential loan.
If you would like to know more about investing in real estate, or have questions. Call me!
Greg Johnson at (541) 672-1616.
