Why Should You have Investment Real Estate in the First Place?

1. TRAVISWHITENEWPORTBEACH Benefits of Purchasing and Owning Investment Real Estate

2. Real estate is the IDEAL investment compared to all others I - Income D - Depreciation E - Expenses A - Appreciation L - Leverage

3. "I" inIDEALstandsfor Income Your investment property should be generating income from rents received each month. Of course, there will be months where you may experience a vacancy, but for the most part your investment will be producing an income. Be careful because many times beginning investors exaggerate their assumptions and don't take into account all potential costs.

4. Many naïve investors purchased properties with the assumption that the appreciation in prices would more than compensate for the fact that the high balance mortgage would be a significant negative impact on the funds each month. Be aware of this and do your best to forecast a positive cash flow scenario, so that you can actually realize the INCOME part of the IDEAL equation.

5. "D" inIDEALStandsforDepreciation With investment real estate, you are able to utilize its depreciation for your own tax benefit. What is depreciation anyway? It's a non-cost accounting method to take into account the overall financial burden incurred through real estate investment. Look at this another way, when you buy a brand new car, the minute you drive off the lot, that car has depreciated in value. When it comes to your investment real estate property, the IRS allows you to deduct this amount yearly against your taxes. Please note: I am not a tax professional, so this is not meant to be a lesson in taxation policy or to be construed as tax advice.

6. Although this is a vastly important benefit to owning investment real estate, the subject is not well understood. Because depreciation is a somewhat complicated tax subject, the above explanation was meant to be cursory in nature. When it comes to issues involving taxes and depreciation, make sure you have a tax professional that can advise you appropriately so you know where you stand.

7. "E" inIDEALisforExpenses Generally, all expenses incurred relating to the property are deductible when it comes to your investment property. The cost for utilities, the cost for insurance, the mortgage, and the interest and property taxes you pay. If you use a property manager or if you're repairing or improving the property itself, all of this is deductible. Real estate investment comes with a lot of expenses, duties, and responsibilities to ensure the investment property itself performs to its highest capability.

8. Because of this, contemporary tax law generally allows that all of these related expenses are deductible to the benefit of the investment real estate landowner. If you were to ever take a loss, or purposefully took a loss on a business investment or investment property, that loss can carry over for multiple years against your income taxes.

9. Appreciation means the growth of value of the underlying investment. It's one of the main reasons that we invest in the first place, and it's a powerful way to grow your net worth. The best part about investment real estate is that someone is paying you to live in your property, paying off your mortgage, and creating an income (positive cash flow) to you each month along the way throughout your course of ownership. "A" inIDEAL isfor Appreciation

10. "L" inIDEALstandsfor Leverage You are essentially leveraging your down payment and gaining control of an asset that you would normally not be able to purchase without the loan itself. Leverage is much more acceptable in the real estate world and inherently less risky than leverage in the stock world.

11. Thankyou! Looking forward to working together.