Investing ... in Real Estate
One way or the other, one kind or another ,
"Real estate investing is always about the numbers, never about the wallpaper." - Larry Lick
The most viable investment available that involves possible tax incentives is still real estate. There is seldom reason to fear a downturn, the return can be substantial, and property that is purchased right and pro perly cared for will almost always appreciate in value .
Income property investments are typically held for long-term gain , as well as a hedge against inflation. Real estate investors actually profit from inflation because with a 30% equity, just a 3% inflationary increase in property values results in a 10% return on investment. Without even considering normal operating profits and tax benefits! See the RHOL page on Using Leverage in Real Estate Investing .
Real estate can be purchased in many forms , including: shopping centers, industrial buildings, warehouse net leases, apartments, single family residential housing, and even raw land. The investment can be direct, or through various kinds of partnerships and investment trusts.
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Financial history lessons should help all of us to conclude that - one way or another - families should have investments in real estate. There are several reasons, including: special deprecation and capital gains treatment, using leverage to build wealth, and to help compensate for the expected capitol depreciation likely to occur from government caused inflation.
We at RHOL highly recommend direct involvement in the rental housing business, and we are here to help you with every aspect of your endeavor. However, if you are not able or inclined to be a landlord, and fear the potential personal entanglements of partnerships with landlords, then LPs and REITs are certainly worth your consideration. But remember, passive investments require substantial fees and compensation to brokers and investment managers.