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Tuesday, 01 August 2017 00:00

7 Top Reasons to Invest In Cash Flow Properties

Cash flow real estate continues to grow in popularity with individual and Wall Street level investors alike. What’s the big draw to, and advantages of this asset class?

There are many reasons cash flow properties are an attractive investment. Here are seven of those drivers to consider when looking for new investments.

1. Cash Flow

The cash flow itself is one of the biggest draws to both individuals and institutional investors. Cash flow is critical for keeping any business or investment going long term. The lack of it is the primary reason people, businesses, and institutions go bankrupt. Not only do rental homes and commercial properties produce cash flow, but they deliver passive income as well. This is a major advantage, even over flipping houses or new construction.

2. Equity Growth

While all types of investments and assets can see prices constantly influx, real estate has proven to consistently go up in value over the long term. With global population expected to hit almost 11B in the next few decades, and the US the third most populous nation, American real estate will continue to be in high demand. This in turn will only keep pushing up values. This is organic wealth growth which is completely passive, and often eclipses all other investments in its velocity. Additionally, real estate ownership gives investors the power to influence their own asset values with improvements and positioning. A unique factor which is almost exclusive to this domain.

3. Returns

The combination of equity appreciation and cash flow yields is a two for one advantage which compounds returns, putting real estate in the front of the pack when it comes to total returns. However, for some, this may be the only way they can invest in the property they plan to buy, and reposition it, or bring it up to a performing level that will qualify for even better terms on long term real estate financing. It's a simple financing option allowing you to use the value of the property instead of the DSCR to get the loan you need.

4. Security

Intelligent investors know that no promise of returns is worth taking on unnecessary risk. While real estate trading prices can certainly fluctuate as with any other investment, it offers a tangible asset. The buildings and land have real value. This is stark contrast to stocks which can be completely evaporated in a crash.

5. Leverage

The ability to leverage cash flow property investments with real estate loans gives investors the ability to rapidly catch up and grow portfolios at an accelerated rate. This is the opportunity to control more assets and cash flow than investors could without leverage, and faster. At the same time, it lowers risk and exposure in each investment.

6. Have Others Pay for Your Investments

Cash flow property investors can use leverage to scale their portfolio and wealth quickly, and then have other people pay off their loans for them. Tenants are paying down that debt every month, as well as providing disposable cash. Each month this increases the equity position in the property, and investor net worth.

7. Tax Benefits

One of the most popular reasons to invest in real estate is the tax benefits. Cash flow properties provide an array of organic tax breaks and potential write offs, as well as the option to used advanced tax strategies to defer taxes on gains, and even enjoy tax free returns.


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