5 Reasons Why Real Estate Is a Great Investment

Real estate is a great investment for many reasons. You can enjoy an excellent rate of returns, amazing tax advantages and leverage real estate to build your wealth. Here are the top five reasons why real estate is a great investment.

Real estate provides better returns than the stock market without as much volatility.

Historically in real estate, your risk of loss is minimized by the length of time you hold on to your property. When the market improves, so does the value of your home, and as a result, you build equity. The risk never changes in the stock market and there are numerous factors beyond your control that can negatively impact your investment. Real estate gives you more control of your investment because your property is a tangible asset that you can leverage to capitalize on numerous revenue streams, while enjoying capital appreciation.

Real estate has a high tangible asset value.

There will always be value in your land, and value in your home. Other investments can leave you with little to no tangible asset value such as a stock which can dip to zero, or a new car which decreases in value over time. Home owners insurance will protect your investment in real estate, so be sure to get the best policy available so your asset is protected in the worst-case scenario.

Real estate values will always increase over time.

History continues to prove that the longer you hold onto your real estate, the more money you will make. The housing market has always recovered from past bubbles that caused home appreciation to slip, and for those who held on to their investments during those uncertain times, prices have returned to normal, and appreciation is back on track. Now, real estate investors in the top performing markets are enjoying a windfall. In fact, this past year, every state in the nation had a positive appreciation, and some of my clients in the Los Angeles market have made millions of dollars in less than a year from flipping.

An investment in real estate can also diversify your portfolio.

If you’ve ever spoken to a financial planner about investing, then you are very aware of the importance of diversification. When you diversify your portfolio, you spread out the risk. Real estate will always serve as a safe tangible asset to mitigate the risk in your portfolio. Many have amassed wealth by solely investing in real estate.

Last but not least, real estate investing comes with numerous tax benefits.

You can get tax deductions on mortgage interest, cash flow from investment properties, operating expenses and costs, property taxes, insurance and depreciation (even if the property gains value) and other benefits. The end of the year is a very busy time for real estate because people want to take advantage of the numerous tax benefits before the end of the year! Sell your house fast.

An investment in real estate is not only a safe financial investment, it is also an investment that can provide years of fun, happiness and priceless memories that will last a lifetime.

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Commercial real estate acquisition: 5 tips for success

Buying real estate is a costly undertaking, and business owners need to exercise due diligence every step of the way. Without proper planning, entrepreneurs can face a host of problems, including inadequate financing, unexpected construction costs, inefficient layout and environmental lawsuits.

Although real estate costs have shot up in recent decades, entrepreneurs are still usually better off buying properties than renting them. Not only will you not be faced with rent increases, but your property may appreciate in value as well. Plus, a buyer can deduct the value of a loan, mortgage interest or depreciation in the value of a building from company taxes—something that can’t be done when renting.

So what makes a successful commercial real estate acquisition? Here are five tips that can help.

Understand the local real estate market

Before making a decision on what to buy, entrepreneurs should pay heed to where they’re buying. Each local market has its own tax rates, land inventory and environmental issues. The supply of skilled labour in the area also needs to be considered.

Consult an accountant

Affordability is a big issue in commercial real estate today, so before you go to a bank, you should work with an accountant to determine your budget. Make sure your budget includes all hidden costs.

Tax implications can also be complex in real estate transactions. That’s why it’s particularly important to consult an accountant who knows the ins and outs of commercial real estate deals.

Your accountant will be able to tell you, for instance, whether the purchase should be considered a corporate or personal transaction. Other issues include succession planning, transition financing and decisions about how assets will be broken up when the business is sold.

Get your financing in order

Getting approved for commercial real estate financing isn’t easy.Bankers will want to see high-quality financial statements and evidence that the profits you generate are being retained by your company. All of this will play a big role in determining whether you get the commercial real estate loan you want.

It’s also a good idea to shop around for the best financing package. Don’t forget that while the interest rate is important, it’s far from the whole story. Other factors such as what percentage of the purchase a financial institution is willing to finance are equally, if not more, important.

You should also resist the temptation to sway lenders with overly optimistic forecasts—payment problems down the line can boost costs and reduce your manoeuvring room.

Plan your layout well

Whether it’s an existing building or one you’re renovating, layout has a major impact on operational efficiency. That’s why it’s often a good idea to hire an operational efficiency expert to advise you on how to optimize your layout.

Choose the right builders

You should be looking for quality builders who have a good reputation and are responsive to your needs. Key traits of good builders include experience, timeliness and knowledge of your industry.

For example, if your building must meet food-industry standards, your builder should have expertise in that sector. A builder’s financial history should also be considered. You don’t want a situation, for example, where a contractor is taking your deposit to fund a previous job where they ran out of money. If you have any doubts, do a credit check.

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