Four reasons to love owning real property (over stocks, REITS and notes)

Estimated read time 5 min read

How often have you heard people ask if it is better to invest in stocks/mutual fund or real estate? What are the pros and cons of investing in a real estate investment trust (REIT) compared to a rental property or a REIT? What about notes and rental properties? What about flipping property as opposed to owning rental properties?

In these debates, there is one category that I would like you to take into consideration: property.

What is real estate?

This term refers to the ownership of a real property. If you own a home, a rental, an apartment complex, etc., then you are the owner of that property. This property is real.

Look back at the contenders. Real estate versus mutual funds/stocks, REITs versus rental property, notes versus rentals, and flipping against rental properties. Which one of these includes owning real estate? What if I answered by saying which of those do not involve owning real estate? Stocks/mutual fund, notes and REITs. Flipping is technically owning real estate, but in a very different way than I am talking about. I will not include it on my list of non-real property items, but you should know that it does not come with the benefits I’m going to discuss.

What about the benefits?

Real Estate Offers 4 Benefits Only Real Property Can Provide

Instead of debating the pros and cons, I will tell you what the main benefits are of owning real estate. You can then decide how these compare to other options.

Some of these advantages are available with other investment options, but I believe that real estate is the best way to achieve them all.

Control

All you control freaks, here’s a message for you! You are out there, I can see you. I know this because I was once one (ask another day how I got rid of it). Put this in perspective. How many people are utterly terrified to invest their own money? Some people aren’t afraid forever. There are some guerrillas who dive right in. But for most, it can be intimidating to invest a large amount of money.

Explain to me how so many people feel comfortable investing in stocks. What can you do after you have invested your money to ensure that your investment is successful? Nothing! To achieve success, you are totally dependent on others. Can you save your investment if everything goes haywire? You can’t do much other than grab your money and run!

You have complete control over a property if you own it. You can still hire or fire a property manager, even if they are managing the property. You have the power to make changes if necessary. You choose your tenants, decide how funds are allocated, and you ultimately have the final say. You are in full control! It’s a great feeling to know that you have full control over your investment.

Appreciation/Equity

Real estate is still a great investment. You can bank the increase in value of your property. You can either let it sit or refinance and take it out. Or you can sell the property for its increased value.

Tax Benefits

Many people are unaware of this secret! Tax Benefits are available when you own a real property. You can deduct all expenses related to the property. The second, and most important, is that you can write off the depreciation. The IRS allows you to write off the depreciation of your property each year. This can have a huge impact on your tax returns.

What can and should ultimately happen when you own real estate is that all the write-offs you get will equal the income you receive from the property. This income becomes tax-free. You don’t really think this is that great? This could mean a 30% increase in your profits! This will often give you a tax-free income and even more money in your pocket, on top of the income tax that would have been paid.

Win From Losses

It should be included under tax benefits, but it is worth a separate category. (In case you’re like me and skip any paragraphs that mention taxes). You can deduct a loss of income from your real estate if you have one. This will not only help you with your loss, but it can also save you sanity. It’s never fun to lose money, whether it be in real estate or any other area. But being able report the loss makes you feel as if there is some small light.

Many people believe that REITs, notes, or stocks are less risky and more passive. Owning real estate can be as passive or as risky as you wish — it depends on the way you structure it. I’m not sure what risk is. To me, it still feels like there’s less risk with something I can control directly. ).

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