Small Steps Now Can Lead To Giant Steps In The Future

Why Buy Real Estate in Old Town, Kingstowne, Del Ray, or Manchester Lakes?

Cash Flow - Real estate investments structured with enough down payment, will generate a positive cash flow. As time passes, in most markets, even a highly leveraged, negative cash flow property can turn into a positive cash flow investment.

Leverage - Through the use of borrowed money (OPM - Other People's Money), combined with a small amount of money of your own, you can control real property. The best leverage most of us can obtain in the stock market is 50%. In real estate, it is not unusual to obtain 80%, 90%, and even 100% leverage. With leverage usually comes risk, and with risk comes potential for investment reward.

Appreciation - It depends on the market. Real estate is a growth asset and often the largest part of the return is the equity gained through appreciation.

Tax Benefits - Investors are allowed to write-off (within income limitations) all operating expenses, interest on loans secured by the property, property taxes, and the "non cash expenditure of depreciation.
Gain from the sale is treated as capital gain and investors have the option of exchanging which, if done in accordance with the tax laws, can result in no recognized gain, thus no immediate cash tax consequence.
Equity Build-up - This results from the periodic pay down of the principal amount of the loan. Even if there was no appreciation over the life of the loan, the property owner would end up with a free and clear property which generates rental income.

Said another way, real estate is the IDEAL investment (Income, Depreciation, Equity Build-up, Appreciation, Leverage).

Source: Saul Klein, InternetCrusader