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As you guys all know, there are many different investment vehicles out there that you can make a lot of money from. But why would you invest in real estate as opposed to the traditional stock market? We’re going to look at that question a little more closely today.
There are three ways to make money in real estate:
1. Appreciation. Home values go up over time. When you purchase at x, it will eventually go up to y over time. Certainly, there are fluctuations in the market, but in the history of real estate, those values always go up eventually.
2. Depreciation. The government gives you incentives to purchase and own real estate in order to stimulate the economy. These deductions lessen your income for these things.
3. Cash flow. This is money that you make after somebody pays your mortgage with rent. The difference in rent and the mortgage payment is your passive cash flow each month.
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Home values always go up over time.
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In the stock market, the only way to make money is through appreciation, although the cyclical nature of the market is similar. The stock market just makes promises of tomorrow while real estate does that, and pays you today.
There’s a clear advantage to investing in real estate just based on the sheer numbers. If you have any questions about this topic or where you should be putting your money when it comes to real estate, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.
