The Top Keys_Benefits of Purchasing and Owning Investment Real Estate


So ... You may be wondering, why should you buy or invest in real estate in the first place? Because IDEAL investment! Let's take a moment to address the reasons why people should have investment early investment sites. The simple answer is a well-known summary that talks about the important benefits of every home for sale. Simply put, Investment Real Estate is an IDEAL investment. IDEAL stands for:

• I - Revenue

• D - Depreciation

Real estate is an IDEAL investment compared to all the others. I will explain each benefit in detail:

The word "I" in IDEAL stands for Income. (a.k.a. good cash flow) 

Does it generate revenue? Your investment should be in the form of a monthly rent. Yes, there will be months when you may find space, but most of what you have invested will be generating income. Be careful because often beginners investors exaggerate their thinking and do not consider all the possible costs. The investor should know when buying that the property will cost a monthly fee (otherwise known as poor cash flow). This situation, while not ideal, may be correct, only in certain cases which we will discuss later. It depends on the risk tolerance and the owner's ability to fund and pay for the negative production assets. In the years of real estate development, prices were very high and rental income did not increase in proportion to the number of commercial real estate investments. Many inexperienced investors have bought property thinking that the fall in prices would be more than compensating for the fact that high-interest loans could have a significant negative impact on the funds every month. Be aware of this and do your best to predict the positive cash flow, so that you can see the INCOME part of the IDEAL statistics.

In most cases, it may require a lower down payment (hence a small amount added to the collateral) in order for your income to be accepted on a monthly basis. Ideally, you end up paying off the loan so there is no doubt that cash flows will come in every month, and that is very true. This should be an important part of a person's retirement plan. Do this a few times and you will not have to worry about money later on when you are on the road, which is the main goal and reward for putting yourself at risk of buying a place to invest early.

The "D" in IDEAL stands for Depreciation

With real estate investment, you can use your discount to get your tax benefits. What is depreciation anyway? It is a non-cost calculation to consider the total financial burden earned on investing in real estate. Look at it another way, when you buy a brand-new car, just a minute away from the station, the price has dropped. When it comes to your real estate, the IRS allows you to deduct this amount every year from your taxes. Please note: I am not a tax professional, so this is not intended to be a tax policy study or to be regarded as tax advice.

That being said, a decrease in the value of an investment property is determined by the total value of the property and the length of time (recovery time based on the type of property - whether residential or commercial). If you have ever received a property tax bill, it usually divides your property value into two categories: one for real estate, the other for property value. Both of these combined values ​​equate to your "whole" base tax base. When it comes to depreciation, you can deduct your taxes only on the basic property value; The IRS does not allow you to reduce the value of the property (because the land is usually only SHOWING). Like your new car driving away from the area, it is a building block that is shrinking every year as its working age grows and grows. And you can use this to earn your own taxes.

A good example of a profit in this regard is depreciation, you can really change the area that creates a good income into a loss (on paper) when you work for taxes with the IRS. And in doing so, that (paper) loss is deducted from your income for tax purposes. Therefore, it is of great benefit to people who are specifically looking for a "tax shelter" for the type of investment in their homes.

For example, and without getting too professional about it, imagine being able to reduce the amount of $ 15,000 a year from $ 500,000 of your own investment space. Suppose you spend $ 1,000 a month (which means after all costs, you have $ 1000 per month), so you have an annual income of $ 12,000 a year from this local rental. Even if you have taken $ 12,000, you can show with your accountant that with a decrease in the number of real estate you have lost $ 3,000 on paper, which is used for any income tax you may owe. According to the IRS, the property saw a loss of $ 3,000 after the "cost" of the $ 15,000 depreciation was considered. Not only are there no taxes to be paid on that rental income, you can use a $ 3,000 paper loss compared to other regular taxable income from your day's work. Investment in high value areas will have equally high tax evasion benefits. Investors use this as a precautionary measure in order to be able to deduct the amount equal to their taxable income each year with the benefit of depreciation on their basic home investment.

Moreover, the IDEAL summary is not just a reminder of the benefits of real estate investment; it is also here to serve as a guide for every investment site you will consider buying in the future. Any purchase you make should be accompanied by an entire investment letter.


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