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January 14th, 2018 by Marco Santarelli
Real estate has long been viewed as a sound investment. Benefits of Investing in real estate are directly related to substantial increase in wealth of an individual. Wholesaling and buying a turnkey rental property are just a couple of the ways investors can benefit from real estate. The important benefits of investing in real estate are increase in property value due to appreciation as well as good cash flow in the form of rental income. Education and networking are very important to become successful in real estate investing.
Another advantage of investing in real estate is that there are many ways in which you can get a superior return on investment. Successful real estate investing is a multifaceted challenge. There are many things to look at in determining where, or even if, you want to invest in real estate. First of all, you need to consider what type of real estate suits your tastes and needs. Would you prefer residential, commercial, industrial, retail, or mixed-use real estate investments? You also need to consider the population growth of a given area, economic development potential, property values and trends, as well as a host of other factors.
What Are The Tax Benefits of Investing In Real Estate
The tax benefits of investing in real estate are that you have the advantage of deducting certain expenses every time you file your annual income tax. When you get rental income from the rental of a residence unit, there are some expenses you may deduct on your tax return. These expenses include mortgage interest, property tax, operating expenses, depreciation, and property repairs.
All expenses you incur to manage your investment property can be deducted from your tax. You can write off repairs immediately in the form of expenses.
The IRS considers conceivable wear-and-tear each building will need over time. It’s called depreciation of a property, and in case you’re an investor in turnkey rental properties, you can use this depreciation as a yearly tax deduction. For residential properties you can deduct the depreciating value of a property over the course of 27.5 years.
When you choose to sell your property, you are required to pay taxes for your capital gains. With the help of section 1031 of the Internal Revenue Code, you are permitted to postpone paying taxes when you reinvest those gains in another property. IRS considers that you are exchanging you old property for another real estate property. However, there is some criteria for 1031 Exchange. The new property must be of the same nature and its value should be equal to or greater than the old property. You must find the new property within 45 days of selling the old one and include it in the official documents, and you must close the deal in 180 days. With the 1031 Exchange, you cannot handle the money, nor transactions, on your own. You need an intermediary to do so, and this person cannot be anyone you’ve worked with in the past two years (e.g. real estate agent, broker, investment banker, lawyer, accountant, or employee). Failure to meet these criteria will disqualify you from the 1031 exchange and would hold you liable to pay taxes on your capital gains.
Primary Residence Exclusion
How to avoid capital gains taxes when selling your house? If you’re selling a house that has been your primary residence for at least two of the past five years, you can take full advantage of the IRS capital gain exclusion.
Capital gains from the sale of your primary personal residence are excluded from capital gains taxation up to $500,000 for married couples and $250,000 for single individuals. In order for the IRS to view the home as your primary residence, you should have owned it for five years and lived in it for at least two years. If the gains are greater than the above amounts, you can also invest that portion through a 1031 exchange described above and get a tax benefit. The IRS allows you to sell one investment and reinvest the proceeds without taxation. The swap must be a “like-
Benefits of Using a Real Estate Agent
Your first investment property can be quite lucrative if you prepare adequately. Before starting in Real Estate Investment, do research all about the property and location a lot. Using a real estate agent can help you a lot in real estate investing. The benefit of using a real estate agent is that they have a formal education, years of experience and neighborhood knowledge. An agent will help in price negotiation, give you market conditions and forecasts.
What Does a Real Estate Agent Do For a Buyer
A real estate agent will help the buyer in finding the right property at a good price which is a critical factor to succeed in real estate investment. While hiring an agent you must find out how many transactions do they close a month/year. How much is the commission? (If you are a seller. Buyers aren’t charged commission.) How popular is their website and where do they usually get their leads? How long have they been a realtor/agent? It’s also very important to check if they can respond to your questions/requests within a reasonable amount of time.
Real Estate vs Stocks – Which Will Make You Richer
The biggest advantage of real estate vs the stocks is that the real estate can safely be leveraged to increase your return on investment. For many people, investing in real estate is a very comfortable thing. They grew up with the idea of, “someday owning a home.” That is a familiar concept compared to buying stocks and bonds. When you own a piece of real estate property, you have something tangible, something you can look at, take your friends to see, and have the satisfaction of knowing that you own that piece of land or that building. It is very important psychologically to the investor.
By contrast, when people buy stocks, the intention is to hold them over a long period of time, investing the dividends along the way. Over the long haul, stocks can provide an excellent return, but along the way, they can experience some extreme fluctuations. The problem is that most investors are too emotional to just sit tight, so they do not execute their plan and they fail to realize their maximum benefits. Remember that calming
Rental Property vs Stock Market
One noteworthy downside of real estate investing is preparing your income property before you rent it out, which defers the time when you can begin profiting from your real estate investment. All things considered, turnkey rental properties take out this issue as you can begin renting them out and generating rental income when you purchase them. In addition, you can hire a turnkey property management company, which means that you will no worries at all to manage your property, to collect rent or to address the complaints of your tenants. As soon as you buy a turnkey rental property, you can find tenants and start collecting rent from them, which is your rental income. As long as you are able to rent out your rental property for enough rent, you will have positive cash flow immediately. Turnkey rental property investing has really led to increase in the number of people turning from stocks to real estate in the US.
For more information on how to buy turnkey rental properties, click on the link. You will find some essential tips which will help you to buy turnkey rental properties. These tips have been proven to be productive and rewarding for a passive real estate investment.
In looking at the financial aspects of owning a real estate, it is much more difficult to be defrauded with real estate than it is with stocks. Benefit of investing in real estate vs. stocks is that with real estate, you can physically go there, inspect it, walk around the land, and make repairs to the building. Your property management company is responsive for ensuring that your rental property remains occupied with qualified tenants so that the rental income flows without any hassles. With stocks, you have to trust in your company’s management. When you purchase a company’s stock, you’re looking for appreciation in the stock value, and perhaps annual dividend if the company pays it. With bonds, you’re looking for income yield on the interest rate paid by the bonds.
Click on the link to know How To Buy Rental Properties With No Money Down.
Another benefit of investing in real estate vs. stocks is how you can use debt. Using debt as leverage in real estate is safer than using debt by trading stocks on margin. Also, in times of inflation, real estate has proven to be a very strong hedge against inflation when there is a loss in the purchasing power of the dollar.
Benefits of Investing in Real Estate in 2018
For 2018, real estate market analysts agree that the outlook is very bright, particularly in certain markets. Different experts will give you different opinions on which market is the best, but most top ten lists have many of the same cities listed. For instance, Zillow lists San Jose as its number one pick while Realtor.com has Las Vegas at the top of its leader board.They have a lot of cash from the sale of those more expensive homes that they can spend in the Las Vegas real estate market. This 33-acre industrial site in the South Waterfront district is set for redevelopment. Plans include several parks, plazas, 2200 residential units and a waterfront by 2020. Nike is planning a 1.3 million square-foot expansion and there are other expansion products in the city. Other cities that made most analysts top ten residential real estate markets include Dallas, Nashville, Raleigh-Durham, and Salt Lake City. Each city has assets that make it attractive to new residents and new investors. Those assets add up to a very bright future for the real estate market in their specific area.
The market information for these cities is based on predictions and forecasts for 2018.
If you interested in buying rental properties and portfolios at this time, you can go for the Houston Housing Market. Houston has everything: the people, the diversity, the business climate, being world renowned in energy, medicine, space, and manufacturing and above all a booming real estate market.
Benefits of Investing Real Estate in San Jose
San Jose looks to have a median household income of $110, 040 and a median home value of $1,128,300 with an increase of 8.9% in home value. Unemployment is extremely low and there is a lot of job availability, making this a very attractive real estate market.
Benefits of Investing in Real Estate in Las Vegas
Las Vegas is a much lower cost of living area and features very good investment potential as well. Median home prices are at $285,045 with sales growth rising at 4.9% and prices increasing at 6.9%. The economy in Las Vegas is growing at 8.7% compared to 6.4% growth for the rest of the top 100 cities. Some of this growth is being fueled by California residents who have sold more expensive homes, maybe due to retirement, and are looking to move to a lower cost of living area. They have a lot of cash from the sale of those more expensive homes that they can spend in the Las Vegas real estate market.
Benefits of Investing in Real Estate in Seattle
Seattle is another area with continued strong growth. Amazon has plans for expansion projects that would occupy 12.8 million square feet by 2022. Other large-scale projects either newly completed or under construction help explain the 100,000 new residents since 2010, with most of those coming in the last four years. Those factors help position Seattle with 102,212 job openings to go along with a median household income of $78, 623 and a home value growth forecast of 5.4%. Median home prices are at $650,000, up $200,000 since 2014. Filling those job openings will continue to bring new residents to the Seattle area, which is a good sign for the residential real estate market.
Benefits of Investing in Real Estate in Denver
Denver shows attractive investment potential. The median household income is at $71, 926 with job openings of 81,479. Home value forecast is trending up at a rate of 3% with a median value of $376,500. The tech industry continues to expand, attracting well-paid employees to fuel the growth of the real estate market. Any time you have expansion of this nature, it drives residential real estate purchases and helps increase property values.
Benefits of Investing in Real Estate in Portland
Portland comes in with median household income of $68,676 and 44,845 job openings. The median home value is at $370,700 with an increase of 3.7% forecast. One of the things that will fuel Seattle’s growth is the development of the Zidell yards. This 33-acre industrial site in the South Waterfront district is set for redevelopment. Plans include several parks, plazas, 2200 residential units and a waterfront by 2020. Nike is planning a 1.3 million square-foot expansion and there are other expansion products in the city.
Benefits of Investing in Real Estate in Dallas
The population of Dallas is expected to double in the next 15 Years. It is one of the leaders in the U.S. for employment and population growth. 52.9% of Dallas rents vs. 33% nationally. You will find newly remodeled REOs (2004 or newer). Turnkey rental properties are available at 5% – 15% below market value with a 3-year appreciation forecast of 11.4%. You should invest in Dallas real estate because Zillow.com ranked Dallas at number 12 in the list of the best places to live in the country in 2017. Dallas’s local economy is a mix of aerospace, computer chips, telecommunications, transport, energy, and healthcare sectors and the Finance and Business services. These sectors are all providers of good wages which allows for a strong market for Dallas investment properties. For more in depth review of the Dallas Real Estate Market, click the link.
Benefits of Investing in Real Estate in Atlanta
Located in the state of Georgia, the city of Atlanta is a hotpot for any type of real estate investment. Atlanta has shown promising population growth and employment, which are two signs of a healthy real estate market. You can purchase investment properties in Atlanta for as low as $127,000. Comparing that to the national average, which is $152,000, that’s a pretty significant deal! Atlanta is one of the top rental markets in the U.S. You can get newly rehabbed properties with tenants. The price of the properties start at $70,000 with up to $750/mo cash flow. 500 people move to Atlanta every day! 2 million more people expected by 2030. Real estate properties have a 3-year appreciation forecast of 9.3%. For more in depth review of the Atlanta Real Estate Market, click on the link.
Benefits of Investing in Real Estate – Conclusion
When cities attract strong businesses with good-paying jobs, the employees that follow those companies and have substantial disposable will look to spend it somewhere. One thing is certain; they will need some form of residential real estate. This year is shaping up to be a very strong year for investors who are in the residential real estate market and there are many markets in the US to choose from.
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