Key For Apartment

Current financial times are more challenging than ever, and we’re all looking for ways to make money. This is where smart real estate investing can serve an invaluable role. Unfortunately, many passive investors struggle to understand the importance of intelligent, productive real estate investment.

Real estate investments can be time-consuming. They can be complicated. Some real estate investors simply don’t know how to get started, stay consistent and become successful real estate investors. With inflation, there has never been a better time to capitalize on an investment property.

Learn the pros and cons of investing in real estate. With the help of a top-notch real estate investing firm, even the most casual real estate investor can get the passive income they need and deserve.

Pros of Real Estate Investing

Before you dive into real estate investing, it is crucial that you fully consider the pros and cons of investing in real estate. If you take on investment properties alone, you may run into some serious problems. Firstly, you could be lacking experience and expertise.

You may be too busy with work. You can make careless mistakes, beginner’s gaffes, and other errors that cost you valuable money. Real estate investing with a trustworthy, expert firm like Peoples Capital Group can assure this doesn’t happen.

With a renowned, seasoned group behind you, you can maximize your real estate investing opportunities.

Consider the following aspects of real estate opportunities to maximize your cash flow and monthly rental income from every real estate investment.

Real Estate Investment is a Reliable Driver of Wealth Accumulation

Real estate investing is important because it relies on a need that we all have. We all depend on shelter to live. Everyone needs a roof, a place to protect them from the elements, a house, townhome, apartment, or otherwise, that can shelter them.

We all require a place where we can sleep, eat and live. This is why real estate investing can be so reliable. Rental property can serve as a consistent cash flow stream, and because real estate appreciates, you can look forward to your property value growing. Not to mention, real estate prices rise with inflation, meaning these costs can be passed through to tenants.

Unlike the stock market value and investments, property values are less risky. Property value fluctuations are normal, but over time, the stability of real estate investing is undeniable.

Again, the stock market can be volatile, but with the consistent need for housing and shelter, real estate investing is an ideal alternative. If you are risk-averse, investing in real estate is a primary way to leverage rental property and investment property for wealth accumulation.

Investing in Real Estate Can Generate a Steady and Varied Cash Flow

What do successful real estate experts know that we don’t? Consistency, versatility, and durability. Whether a residential real estate investment, commercial real estate investment or industrial real estate investment, all forms of real estate can provide varied and lasting cash flow.

Simply consider the amenities and additional features often associated with rental properties and other types of investment property. Aside from monthly rent, many properties may also have payments for storage, parking, and other resources.

If your goal is to build wealth, you don’t simply want to receive monthly income from rent. You want to offset ongoing expenses. You want to maximize your property investments by turning each one into a long-term investment.

Top firms like Peoples Capital Group understand this. With over 250 properties transacted and over an 8-figure investment portfolio of real estate holdings, the Group has enjoyed significant success with numerous clients. By managing the acquisition, operation, and resale of profitable commercial real estate, passive investors can access the benefits of real estate investing without lifting a finger. If you want to start investing in low-risk, high-return real estate assets, contact People’s Capital Group today.

Understanding Investment Property and Property Taxes

Tax Calculation

Many real estate investors, property managers, and rental property owners may not fully grasp it, but investments such as a rental properties offer numerous tax benefits. The truth is, nobody likes the taxman. He’s out to get us, to siphon our hard-earned cash and claim as much of our earnings as he can.

With the current state of inflation, we’re all looking to pay the taxman as little as possible. Nobody wants to fear going broke, constantly stressing over the financial future. Sadly, many people new to real estate woefully lack the know-how to beat the taxman.

They may struggle to find reliable off-market deals. They may struggle to break into the market. They may struggle to understand how real estate values fluctuate or how real estate defers taxes throughout the investment period. Many people simply struggle to manage properties directly for a variety of reasons.

How Do I Access Tax Benefits?

To receive tax benefits, an investor needs to understand the current tax laws. Unfortunately, the laws that apply to the real estate market are complicated and onerous. Even good real estate specialists and real estate agents can have difficulty with them.

This is why it’s important to have a trusted, expert investing firm that can deliver results. Your money (and other people’s money) should be employed to create more money. It should be used in a way that is self-perpetuating, put into a tangible asset class that delivers consistent, reliable, and growing returns.

Use Deductions To Your Advantage

One of the best aspects of real estate is the tax write-offs. These deductions may be directly related to those expenses associated with one’s investment portfolio. A top property management company may be well aware of these deductible expenses.

They include:

  • Property taxes, insurance, and management fees
  • Mortgage interest
  • Repair and maintenance costs

When investing in real estate properties, such as rental property, you may also qualify to deduct expenses associated with running your investment portfolio. These can include costs associated with advertising for rental properties, office space, business equipment, travel costs, and legal/accounting fees.

Income Taxes and Real Estate

Taxing ongoing income is an important piece of this puzzle. With something as long-term as real estate investing, understanding how tax laws and codes can be leveraged is crucial.

A top real estate agent and real estate investor knows that investing in real estate is as much about the cash inflow as the outflow. If you’re investing in real estate and not capitalizing on ‘loopholes’ in the tax system, you may be missing out on significant savings.

After all, a number of these deductions can significantly reduce your taxable income and are important considerations when addressing income taxes. If you’re looking to offset leasing fees and get the most out of your initial investment, you need a real estate expert firm you can trust.

Deferring Tax With Real Estate

You can even enjoy a tax deferral period whereby you use what is called a 1031 exchange. These reward those who reinvest their real estate profits into new holdings. If the new investment property bought is of equal or greater value than the one sold, you can defer paying capital gains tax.

Overall, there are many ways you can capitalize on these laws, and they can be differed depending upon the property management, the type of property (commercial properties vs. residential property), and other factors.

Don’t let the nuances of state income taxes and other taxes lower your real estate income. Tax benefits are here for your benefit. With the help of top real estate experts and the right investment vehicle, you can get the most out of your hard-earned money.

Of course, that is not to say that real estate does not also come with many challenges. Not all investments are success stories. In fact, some are complete failures. You end up with less peace of mind, less cash, and a far bleaker outlook for the future. Here are some of the cons that can happen when you don’t invest wisely with certified, top-notch professionals to guide you.

Cons of Real Estate Investing

Investing

If your investment strategy is lacking, you’re going to find out, and there is a good chance you will find out the hard way. You must understand the fundamentals of using your money judiciously with a keen understanding of the market, assets, and timely decision-making.

A good expert can help you in all of these regards. You can learn how to buy and hold investment properties. You can learn about market fluctuations from a strong buyer’s market to a strong seller’s market. You can even learn the importance of a modest down payment of 20-25%, a large down payment, and when to take advantage of both.

Several questions can complicate the process:

  • What’s the median sales price?
  • How can you make the most out of a fixed-rate mortgage? Should you avoid variable-rate mortgages?
  • What’s a viable purchase price? What are the property values?
  • What are the associated closing costs?
  • What is the number of houses sold in a given area? Is it the right time to invest in single-family homes?
  • What are the expenses associated with property management and how can you offset them?
  • What protections do you, as an investor, have under fair housing?
  • How do local landlord-tenant laws apply to you?

Whether you’re looking into rental properties for rental income or seeking some other avenue through a property management company, the opportunities abound.

Nonetheless, investing is never a guaranteed goldmine. You need to consider a few factors and act on them accordingly. There are several cons associated with investments in the tangible assets of real estate. However, these issues generally fall under two major categories:

The Investment Process Can Be Lengthy

It is necessary to understand that the investment procedures, including all steps and waiting times, may occur over a period of years. In other words, you may have to be very patient and proactive to ensure decent returns.

While it is generally true that real estate appreciates, this process can be slow.

This can all be subject to the nature of your properties and the kind of tenants you have. You must also consider the full array of expenses, such as mortgage payments and mortgage interest. Some payments are structured based on extended schedules consisting of many years or even decades.

Income Is Not Always Predictable

Obviously, the economy can be a major factor in this. However, consider the effects of changing payment periods, downtimes when payments are minimal, and other internal and external factors that vary cash flow. A given rental property may undergo unforeseen damages or problems with tenants that lead to excess expenses and reduced cash inflow.

Investors may also have to assess a project’s debt service coverage ratio before investing. In other words, are they in too much debt? Would it be a bad investment? Again, factors such as the economy, trends, and internal borrower issues may impact this decision-making.

Expenses Every Investor Must Look Out For

A savvy investor must also be vigilant when assessing the condition of properties. Sometimes, inspections don’t locate a particularly salient problem. Other times, structural issues may weaken over time before suddenly breaking, dramatically decreasing the value of the property.

  • Legal Expenses: In some cases, litigious issues may arise unrelated to the property itself. These could include disputes and lawsuits related to fair housing. There may be disputes over a certain lease agreement or violations of a lease agreement that necessitate legal actions. Many of these problems may come at bad times, reducing cash reserves and providing future issues for debts and obligations.
  • Rental Controls: It should also be noted for investors of residential properties that rent control can often prevent hikes in rent. This can be especially problematic when the other factors mentioned are reducing an investor’s profits.
  • Pricey Transactions: One must also consider the costs of transacting in the industry. Investors often have to incur hefty expenses associated with things such as commissions, title insurance, loan fees, and other costs that may counteract the appreciation of a property.
  • Reduced Appreciation: Not to mention, values don’t always appreciate. They may plummet following a market bubble. Depending upon when the property is bought, an investor may lose significant money when selling at a low point in the market.
  • Vacancy: In bad markets, it may be difficult to find tenants as well. In this case, if the investor is desperate for tenants, the rent prices may have to be lowered simply to attract anyone. Due to its low liquidity, real estate often takes significant time to sell off. This can further hurt the investor.

Final Thoughts

Real estate investing has many pros and cons that each investor must consider thoroughly before entering this asset class to grow their wealth. Fortunately, casual passive investors don’t have to go it alone. With the help of real estate investment experts, even the uninformed can find a way to create a reliable, durable cash flow.

Located in New Jersey, Peoples Capital Group provides its years of experience and sterling expertise for clients just like this. Leveraging historically profitable real estate, they handle all the legwork and manage all the headaches.

As a General Partner, they locate the property, get the contract, start raising the capital and help make their clients money. In the end, their clients can enjoy a far less risky and more viable alternative to other investment options.

The result? A future where investors can feel confident about their journey to financial freedom. If you want to start investing in real estate without the headaches, contact People’s Capital Group today.

Aaron Fragnito

Aaron Fragnito

Aaron has been helping people invest in Real Estate for over 10 years. He is a Co-Founder of Peoples Capital Group (PCG) a real estate investment and holding company. He is a full time real estate investor, as well as, the host of the New Jersey Real Estate Network and host of the Passive Cash Flow Podcast. Aaron has previously completed over 100 real estate transactions as a realtor and another 150 transactions in his current role as a real estate investor.

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