Income Property 101: Revisiting the Benefits of Investing in Income Property

In this financial climate, investors need to re-think their allocation of assets between cash, stock, bonds and real estate. We recommend revisiting the 6 advantages of investing in income properties:

Leverage. Investors receive two benefits from using leverage (OPM-Other People's Money). First, the investors have a high percentage rate of return on the invested capital. Second, the investors can grow their real estate investments and wealth to much higher levels with the use of leverage.

Cash Flow. After the payment of expenses, debt reduction and taxes, investors have cash flow to re-invest in the property, buy the next investment, or distribute to the investor(s).

Appreciation. Through the use of leverage, inflation, and the laws of supply and demand investors achieve higher returns and growth than stocks, bonds or cash.

Tax Benefits. When investors dispose of the property they pay a lower capital gains rate than the taxes paid on ordinary income. Investors can defer taxes through the use of 1031 exchanges. Along with deductions for all of the property's expenses, the tax laws let investors deduct depreciation from income to reduce their tax bill.

Reduction in Principal. The income payments that investors receive are used to pay off the investor's mortgage by monthly principal payments, i.e. principal reductions.

Value Creation. Investment properties will increase in value through property improvements that allow for rent increases, thus increasing the value of the property.

"Don't wait to buy real estate...Buy real estate and wait." Robert Allen

See our website at http://www.coloradoprocommercial.com/