Over the past few years, many of my clients have made home purchases and are beginning to turn their attention to what’s next: saving for retirement, contributing to their kids’ college fund, or taking steps to reduce their taxes.
If you haven’t considered owning investment property as an option, maybe now is the time—doing so comes with some major benefits that can be a driver for strong financial well-being for you and your family. There are four benefits, in particular, that I’d like to go over with you now:
- Wealth. Purchasing an investment property is great for wealth accumulation over time. Ultimately, you’ll own that property, and it’ll be an asset to your financial security.
- Appreciation. Though market fluctuation is a factor, the appreciation rate we tend to see year over year in California is 5%. Putting 20% down on, say, a $500,000 investment will actually yield a much higher ROI than that 5% appreciate rate would suggest.
- Cash flow. Like property values, the cost of rent steadily rises at a rate of about 5% each year. As you’re charging that additional 5% from your tenants from one year to the next, the cash flow you’re collecting will also continue to grow. Give it some time, and you’ll reap the benefits of great cash flow from your property.
- Tax benefits. Often overlooked, an important thing to consider is that you’re able to write off depreciation—the physical attributes and structure of the property. By the time you own the property, this comes out to be about half of its value.
If you have questions about what I’ve discussed in this video or about any other real estate-related questions, please reach out to me. We’d love the opportunity to assist you!