According to Andrew Carnegie, 9 out of 10 millionaires got rich through real estate. More recently, Barbara Corcoran, of Shark Tank fame credited the purchase of a studio apartment as the stepping stone to financial freedom. So how does real estate investing lead to financial freedom? Read on to learn more about ways that buying properties can give you the economic security you crave.
Real Estate Appreciates
Buying real estate puts you in a position to enjoy appreciating prices. However, the reason for the appreciation may surprise you. It’s often not necessarily the structure of the home, but the land that the home occupies that is appreciating. That’s why you don’t have to invest in a huge, or fancy home to earn money in appreciation. But just how much appreciation should you expect?
Over the past three decades, homes have appreciated approximately 4% each year. However, since the COVID-19 pandemic hit, many homeowners have experienced double-digit appreciation. In fact, the January 2022 average nationwide real estate appreciation reached a whopping 19.1%.
Real Estate Purchases Offer Tax Breaks
Owning real estate offers unique tax breaks that you can’t get elsewhere. Not only can you deduct the costs of owning and managing real estate, but you can also get breaks for depreciation of the structure at tax time. You may also be able to defer capital gains using real estate.
Buying Rental Properties Can Increase Your Cash Flow
When you rent out a property, you get to keep the money that is left over after you’ve paid your mortgage, and operating costs. In other words, you’ll be enjoying passive income. Keep in mind though, that when you first buy a rental property, the cash flow may not be significant. But as you build equity and pay down your mortgage your net income from the property is likely to increase, often significantly.
Owning Real Estate Allows You to Leverage Equity
From the day you purchase your home or a rental property, you begin building equity. That equity can be leveraged to purchase additional properties, which then offer you the opportunity to further increase your cash flow while building even more equity.
A Diversified Portfolio Offers Security
Real estate helps protect you from downturns in the stock market. This can provide you with a sense of security, even in times of recession. The housing market and more specifically home price appreciation is not tied to the stock market. So, it’s entirely possible that your home or rental property values can continue to increase, even when your investment portfolio is underperforming.
The Road to Financial Freedom Begins with Your First Purchase
Your path to financial freedom begins with your first real estate purchase. Rather than paying a landlord money to secure their financial future, you’ll begin laying the foundation for your own future by building equity from your first mortgage payment. As you progress from homeowner to investor, you’ll enjoy even more unique benefits that can contribute to a comfortable financial future. And who knows? You may just join the ranks of the millionaires who made their millions by investing in real estate.
Get Help from a Local Expert When Buying Your First Investment Property in Lane County
If you’re ready to begin investing in real estate, Xander Taylor can help. As a local real estate expert serving all of Lane County, Xander and his team at Taylor Made Real Estate are here to help you get started on the road to financial freedom, using real estate as your vehicle. To learn more, send us a message or call 541-729-3632