Thursday 30 January 2014

The best investment on earth


The best investment on earth is earth.’ – Louis Glickman
Depending on how you perceive real estate as an investment that may raise your eyebrows and cause you to be skeptical or you may agree and slowly nod your head. Here are seven unique reasons why investing in commercial real estate is an excellent choice for growing your wealth:
1. Cash Flow
Cash flow is the income that is generated from the rental income after your expense have been paid. This is money going into your pocket every month -- like an extra pay check -- and this can increase over time as rent goes up with the market. Historically rental rates have gone up in India, so potential exists for your monthly cash flow to increase over time as rental rates rise.
2. Capital Gains
Capital gains or appreciation is the increase in the value of the property after time. We have seen prices double in India a couple of times in the past and all you had to do was to own the property to take advantage of this increase. It’s an added benefit of owning a real estate investment.
3. Leverage 
Even if real estate is a high-cost investment, less out-of-pocket is usually required to purchase an investment. This all depends on your borrowing qualifications with a financial institution. The amount of cash that each individual buyer needs to have on hand to purchase a property all depends on their personal borrowing qualifications with a financial institution, and the best thing to do is to talk to a loan officer to find out your buying power and to set out your options.
4. Inflation Resistance
Since your monthly mortgage payment is fixed, there is inflation resistance with real estate. Goods and services go up in price, but your monthly mortgage payment does not. You may actually increase your income when you raise the rent over time for your renters and not for you. 
5. Tax Incentives
The not-so-obvious benefits are the tax incentives: depreciation, business expense deductions, investing tax-free with self-directed IRAs and, the IRC (Internal Revenue Code). That means an investor is able to sell their investment and buy other, like-kind investments, tax deferred. Instead, you can take all the cash and invested it in a few other properties, tax deferred, to not only raise their monthly cash flow but to diversify their real estate portfolio and position it to take full advantage of long-term appreciation.
So in sum, real estate is the only investment that can give you all five financial benefits. It provides an income on other people’s money while giving tax breaks and increasing your balance sheet and hedging against inflation. 
Happy Investing!

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