Spring is in full swing. The sun is out, the birds are singing, and it’s time to start thinking about what to get mom for Mother’s day. 

Tax season is still fresh on your mind and you may be pondering how to improve your financial situation in the coming year. Have you considered investing in real estate?

If you have ever wanted to put your money to good use but were never sure where, real estate may be the answer. Here’s what you should know:

Why Invest in Real Estate

There is a common saying that 90% of all millionaires made their fortunes in real estate. Although it is hard to find reliable numbers confirming this statistic, it is certain that most wealthy people invest at least some chunk of their funds in real estate. 

But why is real estate such a good investment? Well, to answer this question, 3 characteristics of real estate investment need to be mentioned: passive cash flow, appreciation and tax benefits. 

Passive Income

Passive income is income for which the earner has to expend minimal effort after the initial investment. There are only 24 hours in a day, and if you rely exclusively on trading your time for income, the path to riches will be slow. True wealth is created by having multiple passive streams of income. Real estate is a prime source of passive income and,  seeing as it continues to be one of the most secure investments a person can make, it is a great option.

Appreciation

Sometimes properties lose value. But over time, the value of property generally increases. This increase in value is called appreciation. Appreciation can also be forced. This is usually done by making improvements to the property. Renovating apartments is a good example of forced appreciation. 

Tax Implications and Benefits

In both the US and Canada the government offers tax incentives to real estate investment, one of the most basic being deductions. Deductions may include such things as property insurance, mortgage interest, and property repairs. Owning or investing in real estate under a separate entity such as a limited liability company (LLC) can also increase the potential for tax benefits.  

Tax law regarding capital gains also works to greatly benefit the real estate investor as capital gains tax is substantially lower. Passively acquired income is taxed at a lower rate than actively accrued income.

Conclusion

Today, it is possible to earn an income by investing in real estate. Real estate investment has been reliable throughout history and the benefits of having passive income, appreciation in value, and tax benefits make real estate investment one of the most appealing ways to make your money work for you. Perhaps now is the time for you to start your investment. 

Celeste and Rick

A LAUGH OR TWO FOR GOOD MEASURE

HELPFUL LIFE HACK #2

WHY INVEST IN REAL ESTATE?

Forced appreciation

is when you, the investor, control the increase in value of a property. How can you increase the value of a property? You increase the value by increasing the money that your property generates, or the net operating income (NOI). You increase NOI by increasing income or decreasing expenses.