Why you should invest in real estate in 2014

More than 100  years ago, Mark Twain wrote a piece of sage advice: “Buy land; they’re not making it anymore.” He could not have been more right. There will always be a demand for real estate properties, and we believe that demand will become even more pronounced in the next few years as Millennials become interested in owning property. While we believe that most real estate investment are a good decision, we have found that investing in a rental property is a great way to see returns while owning the property.

Build up future cash flow

If you invest in a rental property, you will be able to have an ongoing return on that investment throughout the years long after you have paid off the mortgage. This is an excellent way to ensure that you have an income no matter what the economy does. Remember that the more rental properties you have in your portfolio, the more safeguarded and guaranteed your income from them will be. While one property could be unoccupied, leaving you with no income for those months, having several properties on different lease schedules can help to buffer any tenant loss you may experience.

Have cash to funnel into other investments

While you will need to funnel some of the money you receive from a rental back into the property in the way of maintenance, taxes and so forth, you will also have some capital go directly into your pocket. You can view this as income, or you can choose to funnel it directly into other investments. By taking even a small portion of the money you receive from your rental and turning it directly over to other investments, you can begin to build a portfolio that will provide you with even more returns.

Tax-free cash flow

Depreciation and mortgage interest deductions can mean that any income you receive from your real estate property can basically be tax-free income. You will want to discuss your situation with an accountant to be certain that this will be the case before you invest, but the majority of investors we have met are able to not pay taxes on this income.

Get tax write-offs against other investments

While you are speaking with your accountant about investing in a rental property, we encourage you to have a discussion about how you can use your real estate investment to get tax write-offs against your other investment income. Your eligibility will depend on your income level, your classification as an active investor or as a real estate professional and other factors, but it is possible.