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Friends and family!
Welcome to my very first blog post. What’s the point of this, you ask? I’m here to be your real estate resource, answer questions, and share interviews with industry experts. This is a platform to learn, have conversations, and ultimately, enable you to reach your real estate goals. Every ~two weeks will be a new topic, ranging anywhere from FHA loans to 2021 kitchen trends. So, please, reach out with any requests.
When I first made the decision to switch careers into real estate, it quickly became evident how little I really knew. I had so many questions: What the heck is Freddie Mac? 20% down? PMI? How do you pronounce amortization? (clearly I wasn’t a finance major). It was overwhelming and I didn’t know where to start. But that’s what inspired this blog. Knowledge is KEY. Especially when getting started with your first real estate purchase. So, here we go…
This initial post is just to get the brain juices (is that a saying?) flowing. To touch on a few reasons why property ownership can be beneficial. And why starting earlier, or at least beginning to plan, could set you up for long term financial stability.
1. Setting yourself up for a strong financial future:
This could be in a number of different ways. One could be buying your family home earlier than later, when interest rates are low. Giving you a better chance of paying off that mortgage before retirement. That financial freedom allows you more room to enjoy life.
Another could be owning one or several cash-flowing rental properties that provide you with passive income . Doesn’t sound too shabby, eh? But it doesn’t happen overnight. More on this later.
Ultimately, investing in real estate is a tool many people use to create generational wealth for their future families. Being able to pass down assets can be extremely advantageous. After all, we all know land is limited, and therefore only going up in value. Passing down real estate is very tangible, and if it’s a rental property it’s, again, generating passive income for the beneficiaries. Or they sell, and it’s fairly safe to say they will profit from the sale.
2. Building Equity:
Arguably similar to point #1, but in more general terms. Equity is something you start building as soon as you put the first dollar down to buy. But each monthly principal payment builds more and more of that equity. It’s owning an asset and generating personal wealth that gives you both financial security and freedom.
Once you’ve built up equity, you have options! You can borrow against it, or cash it in.
On the contrary, paying strictly rent is essentially tossing money away. (I’m not judging, I’m absolutely paying rent right now.) But something to think about when people suggest rent is cheaper. It becomes a short-term/long-term discussion.
3. Tax Benefits:
Whether you’re a homeowner or rental owner or both, you get significant tax deductions – and those bad boys add up!
Home ownership: Now, I’m not going to go into each tax deduction (maybe another blog post dedicated to it?), but there are many options for property owners. This includes mortgage interest, mortgage insurance, mortgage points, standard deductions, and others. There are also credits, an example is the residential energy credit to incentivize sustainable home improvements (woop woop, GO Green!).
For rentals: There are several tax advantages. You can claim depreciation as a tax deduction. You can also claim deductible expenses that are required for maintenance. It adds up, and is definitely something to take advantage of if you’re eligible for any of these.
The point of this is to show you, by investing in real estate, you are not losing. Even if you don’t profit much in a few years, you’re saving money that can go to your future, rather than flushing rent money down the toilet.
By no means am I trying to convince you to drop everything and buy a house. It’s a massive decision, and everyone is ready at their own pace…. Maybe even never. I just want to start the conversation, to help people understand the value. And the process. So, when (if) that time does come, you’ll be educated and ready.
I can preach this all I want, but I don’t expect you to trust my word (yet ;)), so I’ve interviewed two successful people, who can speak to this from personal experiences. They have been investing in real estate since their twenties and early thirties. Despite having very fruitful businesses of their own, they attribute a lot of their financial success to these side real estate deals. I’ve asked them to share their stories, and impart some of their knowledge on us young adults. On Wednesday, I’ll post the interviews from Frans Klinkenberg, founder and previous owner of Los Angeles-based Angstrom Lighting (lighting rental agency for Hollywood productions). And Bob Perkins, founder and owner of Northstar Sourcing, a multi-national apparel sourcing company. So stay tuned!
…Thanks for reading!!! See you in a few.
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