I have ONE QUESTION! Seriously……. Take 10 seconds and close your eyes… Just do it, no ones watching this is a blog.
* WHILE YOUR EYES ARE CLOSED I WANT YOU TO IMAGINE WHAT IT WOULD FEEL LIKE FOR YOU EVERY MONTH AFTER YOU WALKED TO THE MAILBOX, OPENED THE DOOR, & PULLED OUT $1,000 IN CASH FLOW FROM YOUR INVESTMENT.
So – How does it feel? What if it was $5,000 every month in cash flow waiting for you from your investments? Feeling change?
As entrepreneurs find success with their primary business ventures, many search for the proper investments for their PROFITS.
Of course, we can and should all start traditional tax preferred vehicles like an IRA and 401k. These are the bedrock of good ‘benefit’ planning for ourselves and our employee’s. I’m also convinced more entrepreneurs should consider rental real estate as an important part of their portfolio.
Let me list a few reasons that may change your mind:
1. Gain more leverage. Real estate is one of the few investment vehicles where using the bank’s money couldn’t be easier. The ability to make a down payment, leverage your capital, and thus increase your overall return on investment is incredible.
2. Grow, tax-free. Buying rental property based on speculation of its value is a dangerous tactic since cash flow is the key. However, appreciation over the long-run is certainly realistic and at the least you should be considering a tax-deferred strategy. In the future, you may even consider a 1031 exchange, charitable trust, or an installment sale to lesson your tax liability further.
3. Tax free cash flow. It’s no secret that because of depreciation and mortgage interest deductions, your cash flow should be tax-free. That’s right! The far majority of the time an investor will never pay taxes on their cash flow and can wait for capital gains on the sale of the property in the future.
4. The tax write-offs against your other income. Depending on your classification as an Active Investor or Real Estate Professional and your income level, there is a good chance your rental property will not only give you tax-free cash flow, but an overage of tax deductions you can use against your other income. Definitely something to talk about with a tax professional before investing so your expectations are realistic.
5. Increased tax deduction strategies. Rental property affords investors with another incredible opportunity to convert personal expenses to potentially valid business deductions. Don’t forget that rental real estate is a business. This means that travel expenses to check on your properties and payments to family members who manage your properties can be deductible and increase the tax benefits when it comes to cash flow and the future sale of the property.
6. Rental real estate is a forced retirement plan. Americans are terrible savers. We lack the self-discipline to put a monthly deposit into our IRA, SEP or 401k as small-business owners. However, buying a rental property is a significant commitment that you are required to commit to and maintain. You will always be grateful in the long-run when you don’t give up on it and build future cash flow and wealth.
I constantly run into super successful investors that ALL STARTED WITH THEIR FIRST PROPERTY at one point or another. Dont want, take action! The time is now!