Why REal Estate?

The choice between long-term and short-term rental properties depends on an investor’s preferences, financial goals, market conditions, and property characteristics. Both options provide benefits, and it is essential to consider factors such as rental demand, location, property management requirements, and personal circumstances when deciding what type of rental property works best to meet your investment objectives.

Long-term benefits: Stable and consistent income, Reduced vacancy and turnover costs, Lower operational demands, Lower furnishing and upkeep expenses, Potentail for long term appreciation.

Vs.

Short-term benefits: Higher income potential, Flexibility for personal use, Ability to adjust pricing and availability, Opportunity for portfolio diversification, Potential tax benefits.

The majority of income from owning properties comes in the form of rent. Tenants pay a fixed (long-term) or variable (short-term) amount which can go up with inflation and demand. This rent covers the costs associated with owning the property, allowing the owner to claim the balance as income. Often referred to as cash flow.

Appreciation refers to the value of a property increasing over time. It is a key factor in the potential to build long term wealth. As property values increase, the owners equity in the property grows, resulting in a higher net worth. This increase in net worth can be leverage for future investments and enalbe the owner to further diversify their portfolio with in Real Estate or other asset classes.

There are many ways to decrease your tax bill each year through owning investment properties. One of those ways is: Depreciation, you can deduct a portion of the homes value each year in order to help offset your rental income. Other expenses you incur by owning rental properties may be deducted as well, such as: Mortgage Interest, Property Taxes, Operating Expenses and Repairs.

Leverage refers to the use of borrowed funds to purchase real estate. Some of the options for obtaining funds are: Mortgage loans, Portfolio lenders, HELOC’s (Home Equity Line of Credit), Business lines of credit and Hard money lenders.

It is importnat to remember that while leverage can offer tremendous benefits to aid in investing, it also comes with risks. Investors should consider their risk tolerance, cash options and ability to manage debt before utilizing leverage to invest in Real Estate.

Some of the benefits of leverage can be: Increased ROI, Enhanced cash on cash returns, Portfolio growth, and Preserving capital and liquidity.

Proper analysis of ones financial situation should always be done prior to using leverage.

Historically, Real Estate has been an effective asset class to own to help hedge against inflation. Real Estate has a positive correlation with both anticipated and unanticipated inflation. It offers several ways to protect investors against the eroding effects of rising prices.
Namely: Appreciation, Rental income adjustments, Long term leases, tangible asset value and Supply-Demand dynamics.

Traditionally, Diversification refers to owning investments across different asset classes. We take that definition a little further and define it as: owning investments across different asset classes, industries or sectors, geographic regions and investment vehicles. With our background, we still believe in traditional asset classes like the stock and bond market. However, Real Estate historically has a low or negative correlation to those traditional markets. Thus making it an effective way to provide diversification to your overall investment portfolio.