Denver Home Living Huettner Capital Fall 2018 | Page 35

5
M
REASONS WHY YOU
SHOULD BE INVESTING
IN REAL ESTATE
ore and more people are investing in residential real estate. The majority are not big investors renting large apartment complexes
across the country. In fact, most are regular people buying and renting single-family residences in their local communities. Rental
properties have become a common part of retirement planning because they offer so many benefits:
1. Cash Flow – One of the biggest reasons people invest in
4. Individual Investor Advantage–Individuals have the
real estate is to generate income during retirement. After
saving money for decades, many retirees struggle with the
switch to spending their nest egg. They resist selling assets
to generate cash and
feel more comfortable
spending the income
generated from their
investments. The
problem is that the large
wave of retirees seeking
traditional income-
generating assets like
dividend stocks and
bonds will lower their
effective rate of return. However, monthly rent checks
provide an alternative, regular, and consistent cash flow
without selling the underlying asset.
upper hand on large corporations when it comes to
investing in small residential and commercial property.
The big corporations simply have too much money to be
able to identify, purchase,
and manage small properties
effectively. Therefore, they
invest in large properties
that are out of the reach of
most small investors anyway.
That leaves the one- to four-
unit homes, small apartment
buildings, and small
commercial/office properties
to investors like you.
Rental properties have
become a common part of
retirement planning because
they offer so many benefits.
5. Tax Code – There are some convenient IRS rules for rental
properties as well. In what is commonly referred to as a
“1031 exchange,” you can reinvest the proceeds from the
sale of real estate into another property and defer paying
capital gains taxes. It is also possible to buy and hold real
estate in a self-directed IRA offering similar benefits.
2. Diversification – Investing in different asset classes is one
way to reduce risk in any investment portfolio. Traditional
asset classes are stocks, bonds, real estate, and cash. The
most common way to invest in real estate is to own a home
and live in it. You can also buy property to rent.
3. Leverage–Another benefit of owning residential real
estate is that you can easily borrow against real property,
with low-cost and low-risk fixed rate loans that provide
long amortization periods and favorable terms and
conditions. Borrowing to buy stocks and other assets is far
more difficult and costly, with greater risk and much less
favorable terms.
Rental properties are a popular and growing part of investment and
retirement planning because of the many benefits they offer people like
you when buying homes in neighborhoods just like yours. If you want to
learn how to buy homes to rent, you need to understand the loan process
and your financing options. Therefore, your next step is to contact a
mortgage professional who specializes in investment properties to discuss
your goals. Be sure you take time to interview and check the credentials
of any lender you may use. A great lender can make all the difference.
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