As a real estate agent or broker, you have had significant experience with the market of—let’s say for example, Detroit. You understand the ups and downs of the appreciation values, you recognize the affluent neighborhoods from the trouble zones, and you are well aware of the future plans for the Metro area. Having this foothold on the city gives you a certain advantage when it comes to investing in the Detroit real estate market. You are three steps ahead of the average investor—you have done the research, you have the network, and you know a good deal when you see one.
While these are more than good enough reasons to invest in rental properties in the Detroit real estate market, they are not the only key points on the list of reasons why you should invest in real estate in 2017.
Generate Positive Cash-Flow
As a real estate agent or broker, you have spent quite a lot of time analyzing and researching properties for clients. You have waded through the sea of turnkey real estate ventures, finding just the right investment property to add to your client’s real estate portfolio. Being so deeply involved in the market, you understand how to spot properties which have an excellent return on investment. So, shouldn’t you use that eye to generate a positive cash-flow for yourself?
In addition to continuing to work in the real estate industry, adding properties to your investment portfolio can help to generate additional income—either allowing you to pull back from your current workload or to save for a healthy retirement. As you are currently working in the market, you have access to properties as they become available, allowing you to hand-select the properties which work best with your portfolio and thus generate the best positive cash-flow with a substantial ROI.
Advantage of Researching the Market
As someone who spends their days researching, analyzing, and studying the local market for other clients, you have an advantage over other investors. Researching the market and identifying solid real estate opportunities is your daily job—you are not losing any additional time, money, or resources.
A Quality Portfolio
As someone who is immersed in the market, you can see a good deal when it arises, but you can also spot a seller’s market when you see one. Knowing the ebbs and flows of the real estate market, you are able to accumulate a quality portfolio and recognize the ideal moment in which you should sell your compilation in order to make the best profit.
Gain Landlord Experience
Being a real estate agent or broker as a rental property investor, you are going to have the unique opportunity to be able to identify with your clients, their tenants, and the issues that may arise while investing in turnkey rental properties. As a broker or agent in Detroit, having personal experience with the complications that landlords face on a regular basis will allow you to be able to resolve the issue in the fastest way possible and make you an invaluable asset to your clients.
Save on Taxes
Having a portfolio of rental investment properties can alleviate the taxes you owe, saving you money in unusual places. You can deduct things like mortgage interest, depreciation value, and any repairs made to the property. Travel required to maintain or operate the property, home office expenses, and insurance costs can also be deducted as they all relate to managing the property. Other deductions include fees paid to lawyers, property management companies, and real estate investment advisors. There are a multitude of deductions afforded to rental property investors—consulting with a tax accountant with real estate investment experience can help you find the deductions you are entitled to… and hey, your accountant can be a deduction, also!
Financial Freedom
Becoming a landlord is a great way to secure a financial freedom for yourself that otherwise might not be attainable by maintaining just a real estate agent or broker job—particularly for those who purchase investment properties which require little to no direct involvement from the landlord. Having the additional positive cash-flow from a portfolio of turnkey rental properties can create a liberty otherwise not feasible with the previous single income stream without costing you the time of adding another full-time job. Basically, adding a portfolio of rental properties gives you the opportunity to collect a passive income with very little activity on your part.
Inflation-Proofing
If nothing else entices you to invest in real estate, inflation should. Real estate has often been referred to as an inflation-proof hedge, meaning it is a great way to prevent inflation from eating away at some of your hard-earned dollars. If you are unfamiliar with inflation, it is that pesky factor which causes the cost of items to go up while the overall value of the dollar goes down. While this can be bad news for someone with a lump sum of money—as that money can buy less and less as each passing year goes by—for someone who has invested that lump sum into property, inflation can be a good friend.
How, You Ask?
Let’s say you purchase a home in 2007 for $100,000. You keep the home for approximately 10 years. In 2017, the market has begun to rise and inflation has increased the cost of just about everything. That same house, which you paid $100,000 for, is now worth $190,000. By purchasing the home and sitting on it, you have literally just earned $90,000 in pure profit. As a landlord, with multiple properties in your portfolio, you are increasing this pure profit by the amount of properties you currently own.
Community Benefactor
One thing just about every market currently has in common is a shortage of good, solid rental properties. In fact, a recent study concluded that over 4.6 million additional apartments will be required to be added nationwide by 2030 to keep up with current immigration trends. In Detroit alone, 1,105 apartments will have to be added each year to continue housing the influx of residents.
Not every rental property available to tenants can be qualified as a good rental property. Between poor conditions and even poorer landlords, tenants are constantly on the search for quality rental properties. By providing quality housing to the community, you are essentially doing a public service. A real estate agent/broker is someone familiar with the industry and the standards that accompany said industry. This grants you an advantage over non-local investors—you understand the community, and are better equipped to provide the services required to maintain standing as a good rental property.
When it comes to the benefits of real estate agents/brokers investing in real estate in their local area, the list is astronomical. These benefits are advantageous to both the investing agent and the community—making it a win-win situation for all. Between tax benefits, positive cash-flow, and financial freedom, an agent investing in the real estate market simply cannot go wrong. In addition to the personal value of real estate investing, being a real estate agent who has invested in local market will grant you an understanding of the market and client’s needs that can only be provided by having hands-on experience in the industry.
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