4 Ways You Can Generate Wealth Through Real Estate

Dated: December 14 2021

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4 Ways You Can Generate Wealth Through Real Estate

Real estate is one of the most lucrative business and investment opportunities available in Florida today. In fact, the state of Florida has proven to be a great market for investors and sellers alike. If you are thinking about investing in Brevard County real estate, it’s important to remember that rental income isn’t the only effective way to generate wealth. 

Whether you’re looking to gain financial security for your future or you’re an experienced real estate investor, here are four ways you can generate wealth through real estate.

Property Appreciation

Everyone knows that a good real estate investment appreciates in value over time, but did you know that this typically outpaces inflation? Real estate is an attractive asset class to invest in due to its stability. Although it is generally correlated with inflation, the real estate market typically outperforms the rate at which prices rise. For example, in Brevard County, property values have increased 16.5% over the past year alone! 

Put simply, the longer you own real estate, the more equity you can build. Most real estate investors play the long game by earning the majority of their wealth through the appreciation of their real estate — while profiting from rental income.

Leverage

In real estate, the term “leverage” refers to using borrowed money to buy a property. When leveraging a property, an investor borrows funds from a lender to purchase an investment property — rather than covering the entire purchase cost. 

For example, many lenders only require a 20% down payment, meaning you can borrow the rest of the capital needed to purchase. Assuming your potential cap rate is higher than the lender’s interest, you can achieve a positive cash flow by leveraging!

Using leverage can be an excellent way to rapidly grow your real estate portfolio while simultaneously increasing your profits. However, leveraging a property carries some risk, so weighing up the pros and cons is essential. 

Tax Deductions

Real estate investors can utilize a myriad of tax reductions to offset their expenses and save money when filing taxes. These deductions are critical to maintaining a healthy profit, so it is important that real estate investors fully understand them. Below you will find a list of some of the most common tax deductions for real estate investors to consider.

  • Repairs and maintenance costs
  • Loan interest
  • Deferral of capital gains with 1031 exchange
  • Property management fees
  • Legal fees
  • Depreciation

Rental Income

Keeping a positive cash flow is the best way to enjoy passive income while allowing your investment property to appreciate. In fact, the fastest way to build your property portfolio is to strategically purchase properties with positive cash flow. This tactic enables you to use the cash flow from one property to purchase another. Of course, it’s crucial to research potential investment properties carefully and forecast your income to minimize risk. 

When it comes to investing in Brevard County property, the phrase “buyer beware” isn’t just a saying—it’s sound financial advice. In fact, working with an experienced Brevard County real estate agent can be worth its weight in gold. Our knowledgeable real estate agents are experts in the local housing market and have a network of resources to help you find the best investment property for your needs. Contact us today for more information about local property investment opportunities. 

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