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, 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
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.
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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.
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:
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.
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
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