Benefits of Property Investment

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Investing your money in property ownership will always be more lucrative than any other type of investment.

“It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.”  Donald J. Trump

“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.” Marshall Field(1906)

In order to understand the reason why investing in Real Estate is so lucrative, it’s important to understand how it compares to other types of investment possibilities (i.e. stocks/shares, commodities etc.)

To put it very simply, investing in real estate uses the power and leverage of “Other People’s Money” (OPM.)  When you buy $100K worth of stock, you must use $100K of your own money.  In Real Estate, you can purchase a property with as little as 5% down while the bank finances the rest.  It’s definitely going to require more work because investment properties need to be maintained but if you work with the right Real Estate agent, who can help you calculate the CAP rate and make sure you set yourself up for the best return on investment (ROI) you’ll be ahead of the game.

Chicago is the most affordable of the large cities and is probably the easiest to find renters in.  AND – you should always look to purchase property under fair market value, which is another reason to find a good Realtor; one who knows the market and knows how to negotiate.  If you buy under fair market value, you basically already have built in equity.

The fact is that the Real Estate market has NEVER seen a better time for buyers with interest rates and purchase prices being so low.  Thirty years ago, interest rates were close to 20% if you can believe it!  They slowly made their way into the single digits and with interest rates hovering around 5% there is simply no way you should pass up the opportunity.  What’s more, in some cases, you can buy a property today for as much as 50% off what someone paid on a property 10 years ago.  That’s amazing!

In the last 30 years, there have been a few dips in Real Estate and when the crash of 2008 hit, this was the FIRST time we’d ever seen Real Estate take a dive since the depression.  That’s a pretty good track record all things considered.  Things WILL get better; yes, it will take time, but you should get in NOW while opportunities abound!

Shares and stocks are perceived to have higher returns than property and provide hedge against inflation but they pale in comparison to real estate when you take into account the leveraging power of real estate investing and tax advantages of property.  It is sufficient to say that tax refunds from real estate investments provide you with additional cash flow to buy more investment properties.  In the case of stocks and shares you have virtually no tax benefits and have to pay tax on interest and dividends received.

The price of stock fluctuates on its own merit and there area number of  variables that dictate the price of a stock.  It is therefore very difficult to monitor every stock in your portfolio because each one is very different from the other. In the case of real estate fluctuations of any one property relative to the national average are very low. It requires very little expertise to beat the national average for property and increase your return on investment.

There are obviously a lot of things to consider and there are some excellent resources out there to help you understand Real Estate investing.  I have outlined some basic thoughts to consider and if you care to learn more, please feel free to contact me; I can put you in the right hands!