or 34 % of the total population , living in rental properties . Multifamily investors are in a good position to capitalize on this trend , which shows no signs of slowing down and seems to be accelerating .
Taxation
Among the major asset classes available to investors , real estate is arguably the most taxfavored . There are a few reasons why real estate excels in this regard :
Photo by Nataliya Vaitkevich from Pexels
Image by Nattanan Kanchanaprat from Pixabay
Investors flock to real estate for many reasons , including cash flow generation , appreciation potential , tax advantages , and the ability of some sectors , like multifamily or selfstorage , to weather a downturn or thrive in it . Even so , commercial real estate is not the exclusive domain of the ultrarich .
In this article , we will analyze what makes real estate such a great investment for all investors .
Profitability
Your goal in the markets is to achieve a good return on your investment one way or another . Commercial real estate offers multiple paths to profitability , including cash flow from tenant rents , property appreciation , and unmatched tax benefits , all of which we ' ll explore a little bit later .
Passive Income
Real estate provides investors with the potential to generate regular passive income from their assets . You can either do this by acquiring properties and hiring property management companies to manage them or by investing in a real estate fund or crowdfunding project where experienced professionals handle the details , and you only need to cash checks .
Appreciation
Often , commercial properties enjoy property appreciation , which is simply an increase in value over time . Commercial real estate assets can be acquired , generating cash flow and eventually being sold for a profit . Even though property appreciation is by no means guaranteed , buying in an area with strong underlying fundamentals can help to ensure that your asset gains value over time .
Buying vs . Renting
The number of Americans who rent rather than own their own home is at a record high , with over 100 million residents ,
A massive benefit of owning a commercial property is the ability to deduct property depreciation .
Depreciation
A massive benefit of owning a commercial property is the ability to deduct property depreciation . The IRS defines depreciation as " an allowance for the wear and tear " of any given asset . By claiming tax deductions on incomeproducing properties , investors are able to recoup many of their costs .
Real Estate Tax Deductions
Similar to depreciation , rental property owners can deduct almost all their property management expenses . This includes mortgage interest , as well as the goods and services you use to run the property .
79