Ask yourself this question, why should you buy or invest in real estate in the first place?
It’s because it’s the IDEAL investment!
Let’s now take a moment to discuss further why people should invest in real estate. The easiest answer is a well-known acronym that defines the fundamental benefits why people should invest in real estate properties in the first place. That acronym is IDEAL.
It stands for I – Income, D – Depreciation, E – Expenses, A – Appreciation, and L – Leverage.
Income means positive cash flow. Real estate properties can generate revenue for its owners in the form of rental payments. Since inventory is low and demand is high, buying a home is not as easy as you think it is. For some people, they just can’t afford to buy their own homes just yet. As a result, they rent. Rates vary depending on location and a lot of other factors. One thing is sure though; people will always need a place to stay.
The moment you drive a brand new car off the dealership lot, the car’s value automatically decreases by around 20%. In the case of real estate, depreciation comes in the form of tax benefits. For example, as a property owner, you’re bound to spend money on remodeling or renovation projects. You can charge these expenses to your tax bill. Make sure to consult your accountant so that everything you accuse of your annual tax bill is valid.
When you own a property, you must take proper care of it, so it does not become a liability. Expect to spend money on repairs for damaged windows or fixing a leaking roof. You also have to pay your property taxes. It’s like the rent you pay to the government for their services. Maintenance and ownership costs become part of your expenses once you own a real estate property
Your calabasas luxury homes for sale value will rise and fall as the market conditions change over time. It has been observed though, that the growth in value of real estate properties can be likened to the return of a stock market portfolio over a period of 20 years. As a general rule of thumb, it is always best to measure the appreciation of real estate properties for the longer term.
The lesser amount you owe on your mortgage, the more significant your equity. When you have fully paid your mortgage, you have 100% equity in your property. If your property is worth a million dollars, your net worth must be close after deducting any of your liabilities. You can also use your equity as leverage when you apply for a loan. Use this loan to fund your business venture to generate more wealth for you.