Why Real Estate?
According to The College Investor over 90% of the worlds millionaires created their wealth by investing in real estate. What is it about real estate that has enabled so many people to achieve financial freedom?
Real estate generates near-perpetual income streams which you cannot out-live. Traditional investments (stocks, mutual funds, CDs, etc) are based on the concept of accumulating sufficient capital such that you can draw down at a fixed rate over a finite period of time. Here is an article explaining the differences between real estate and traditional investments in achieving financial freedom.
Real estate is the only investment for which you can obtain long term fixed rate financing. With 20% down conventional financing (the most popular with our clients), $20,000 enables you to add $100,000 in real estate to your balance sheet.
Rental market stability is a huge advantage of real estate. The stock market can unexpectedly crash over night (and has many times) but rents historically have not. For example, during the 2008 market crash, even though real estate property values in Las Vegas plunged approximately 56% (the worst drop in US history), rental rates did not decrease so your cash flow and return on investment were not impacted.
While inflation can wipe out savings the opposite is true with real estate. With real estate your largest cost (debt service) is fixed while rent and market value (appreciation) track with inflation thereby increasing your return. Further, interest rates increase during times of inflation limiting people's ability to purchase homes and increasing demand for rental properties.
Holding real estate has many tax advantages. In summary, expenses (debt service interest, depreciation, etc.) are deductible and in most cases result in a tax loss while providing a positive cash flow.
Real estate is unique in that you can sell an investment property and buy another with no tax consequence if you follow the 1031 Exchange rules. Wouldn't that be great if you could do this with stocks!
As long as you buy investment real estate in a good area, all but the worst mistakes will be corrected over time through appreciation, inflation and rent increases.
Once you buy it requires little time if you use a good property manager. Most of our clients spend less than 15 minutes a month reviewing the monthly reports.
Want to know more about investing in Las Vegas real estate? Contact us today. You will be glad you did.
Eric Fernwood, Realtor | 702-358-8884 | EricFernwood@gmail.com
Cleo Li, Realtor | 512-296-0425 | CleoYLi@gmail.com
Vegas International Properties Group (VIP Realty Group)
7570 Norman Rockwell, Suite 140
Las Vegas NV 89143