Gary Keller explains in his book "The Millionaire Real Estate Investor" why real estate is a great investment. Here are eight reasons why.
1) Accessible - Anyone can buy property. We live in the USA, not in feudal England!
2) Appreciable - In almost all cases, real estate values go up over time.
3) Leverageable - Because real estate is fixed (hard asset), you can borrow against it.
4) Rentable - People will pay the owner to use the property. Goal: Cash Flow!
5) Improvable - It's possible to add value to the property by improving it (building/adding something).
6) Deductible/Depreciable/Deferrable - There are many, many, many tax benefits.
7) Stable - Real Estate is a stable asset class, not very volatile, especially when compared to the stock market.
8) Liveable - People have to live somewhere! Just look at all the people moving to Houston these days!
I think my favorite concept is #3 combined with #4. It amazes me how a bank can loan someone at 5%, and the owner of the property is able to make a return of 15% with very little work - and generate equity, appreciation, and cash flow by having someone else pay the rent.
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