- Leverage: e.g. You can own an asset valued at 100K for only 20-25% down. Like buying on margin in the stock market!
- Cash Flow: You can rent your property out for a positive cash flow, while someone else pays your balance owed on the principal residence.
- Tax Write offs: track and record all expense reduces taxable income & taxes paid
- Depreciation: defer, defer, establish trust, die
- Mortgage paydown – by paying down mortgage you will owe less on the mortgage which is increasing the amount of equity you have in the home.
- Annual Appreciation – On Average we have seen 5-10% Annual increase here in Minnesota over the years. e.g. 200,000 house will gain 10,000-20,000 in vale over a 12 month period.
- Building equity through improvements/rehab – Opportunity to maximize value is in your hands – One of the best things about real estate is that you can improve a property if you want – add amenities like a pool, or improve it with an updated kitchen or bath. You can than either rent it out or sell it for more than you paid for it.
- Minimal investment cost – In some properties, you can use loans for 100% financing, and some traditional conventional products with as little as 1% or 3%.
a. 1031 Exchange option
b. New “Cost Basis”