Below are some talking points that always come up when I meet with a someone considering investing with our team. In a future post I’ll be covering multifamily specific advantages.
Cash Flow (Income) - stay tuned for an in depth numbers overview in a future blog. In short, after rents are collected, operating expenses are paid, and the loan is paid, cash flow is left.
Leverage - Theres so much power in leverage. If you have 500K to invest in a stock portfolio, thats your cap and all you can get in terms of value. But with leverage in real estate, we use that 50K along side a loan to purchase a much larger asset.
Equity Growth from loan pay down
Appreciation comes both organically as well as strategically. When we buy our primary residence, we hope that it will appreciate over time. Really we have no control what will happen organically and cannot always time the market. Instead, we like to force our appreciation and create our value with strategic business plans.
Depreciation - The IRS gives us this beauty, so let’s use it. We use their scale to identify our non-operating expenses as an amazing tax benefit to lower our taxable income. This is best done via a cost-segregation study, and we have relationships with national firms to perform this activity for us.
Refinance - this typically goes alongside appreciation but is not available in other investment asset classes. A typical strategy is after some appreciation is seen, we can pursue refinancing to cash-out some equity, pay off the original loan or simply get a new loan with better terms.
Asset Protection in the form of insurance. Whether is a natural occurrence or an accident, we mitigate risk with strong policies to protect us.
Consumption - owners can enjoy their properties and is a unique advantage to real estate.