Real estate investors enjoy access to many tools and options that aren’t often available in other fields of investment, including buying notes, IRS tax advantages, real estate mentors, and marketing opportunities for fixing up and reselling property.
Rehabbing is only one example of a wealth-building opportunity in real estate. In fact, flipping houses has become a pop-culture phenomenon, as witnessed by the success of TV shows like “Flip The House,” on A&E. Savvy rehabbers can secure financing to purchase a house and improve it, then sell it for a profit that not only pays back the original loan, but returns a profit that allows them to invest in another property — a strategy that amounts to risk-free investing.
Other real estate investment opportunities include buying properties in foreclosure, and in tax and estate auctions. Once the property is obtained, ownership itself offers additional wealth-building opportunities. Rentals, pre-construction work, landlording, and investing in apartments or self-storage properties are just a few real estate strategies that provide investors with several choices on how — and how much — they want to be involved with their property. Moreover, motivated sellers can use infomercials and the Internet to market their investments and all but guarantee handy returns. At the same time, a real estate investor can choose to buy and hold property, buy and sell notes, or buy into a Real Estate Investment Trust, and then let the investment itself do the money-making work, much like a stock- or bondholder, who simply owns a portfolio and watches it grow.
Real estate offers multiple tax incentives and advantages, too. The IRS’s 1031 Exchange rule allows the exchange of certain types of property in order to defer capital gains (or losses). In addition, mortgages, lease options, rentals, and numerous other transactions almost always give accountants tools to help their investing clients.
While real estate offers so many tools, many people are learning that they don’t have to be a realtor or real estate attorney to use them. Moreover, banks and other conventional lenders provide multiple and often creative resources for mortgages, loan modification programs, and asset protection, to name a few. In addition, with foreclosed properties and with REO Bank Owned Property, banks list properties that are available for purchase far below market value and, with a some improvement, can be turned to a handsome — and relatively quick — profit with often nominal risk.
In short, the long-reliable world of real estate provides an astonishing array of tools and strategies for investors to build credit, reduce or defer taxes and create wealth. To read more on this topic, visit Peter Harris‘ blog.…