InvestmentReal Estate Investment: An Insider’s Perspective on the Benefits

By Hogan Willis, Agent, Luxury Simplified Marketing

Are you considering an investment in real estate? Most people see an investment property as a way to create passive capital gains, but there are other notable benefits of owning an investment property. Let us have a quick look at a rental play …

Investment property can yield rental income.  Also, in a market showing rising property values as is currently reflected in the Charleston area, it will appreciate over the long term, delivering the potential for a substantial profit when it comes time to sell.  However, be conservative in this expectation as large rises are unsustainable; we pitch at about 3% p.a. for our investment decisions.

Making a mortgage payment every month is not enjoyable, but what if you had someone pay it for you? That’s exactly how it works.  Your tenants pay rent and, for the correct investment choice, this is higher than your mortgage plus maintenance costs. Are you currently paying rent?  Every month you are helping your landlord pay off his mortgage.  You have no equity accrued of your own and nothing to show for all that money you have been paying to live in your home.  If you were to buy an investment property the rental income will cover the mortgage payment and other housing expenses to upkeep the home, and your personal housing cost become much less. You can live in the property and rent rooms or live elsewhere and use all the property for rental. Now with every mortgage payment you are building equity.  We all started small and built our portfolio’s over time.  It is really quite simple but does take time and hard work.

One of the key benefits you gain from your investment property is a positive cash flow.  The idea of a investment property is that the income generated will be higher than the cost of buying and running the property.  This includes the mortgage payments, property taxes, home maintenance, upgrades and maintenance repairs.  Over the long term, you have now accumulated a significant amount of cash from your investment property.  It’s almost like the property paid for itself. What will you do with this cash? Do you take an additional mortgage on your home and invest in another property? You thought your income was great from you first rental property – now double it!

You don’t have sufficient cash for a making a cash purchase for an investment property? One of the benefits in an investment in real estate is that it can be a leveraged asset.  You can purchase investment property with the help of a loan from a bank, unlike other investments such as the stock market where cash is mandatory.

Tip – A great secret for investment properties: buy a property in need of renovation and within your capability, build equity by making the necessary renovations, then build cash flow by renting at an improved rate for a solid, well presented home.