Real Estate As An InvestmentDecember 24, 2012
Real estate is a cash generating asset that can only appreciate with time, given proper care and today’s market is a good time to think about investing. Real estate is like gold or silver; it appreciates in value, but since it is a tangible asset, it doesn’t function like a bond or a stock. There are three main forms of return on investment with real estate: appreciation, cash flow and return on taxes. Each of these things should be considered before you decide to become a real estate investor and a Realtor® can help you with these decisions.
- Appreciation. Appreciation represents the majority of returns on investment. Properties can increase in value a great deal over time and if your goal is long term, the land/house could yield great benefits later.
- Cash flow represents the most direct type of return, since it’s ‘put in your pocket right now’ money. Investing in real estate is a way to increase your cash flow that in turn provides working capital you need to expand your investing.
- Return on taxes – many investors in the higher tax brackets are less concerned with the cash flow and tend to focus more on the tax advantages an investment property can provide.