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Like with any investment, there are advavtages and disadvantages to owning income producing properties. Let's first examine the disadvantages: • Real Estate is not as liquid as some investments. It usually takes more effort and time to convert this asset to cash than stocks or bonds. • Real Estate is not portable. If you move across the country it can't be folded up and taken with you like a Certificate of Deposit. • Income Properties require management and upkeep. You will have to management the property or hire someone to manage it for you. Now let's examine some of the positives: • You can control an asset worth 5 - 10 times your cash investment. • You enjoy appreciation on the entire value of your property, not just on your cash investment. • Rental properties can provide cash to you each month. • Owning income producing properties has some tax advantages that may not be available for other types of investments. • When you invest in income producing properties you use Other Peoples Momey (OPM) in the form of a Mortgage, Deed of Trust, Contract of Sale or some other financing instrument. • Rent from your tenants makes your monthly payments • Depreciation can be charged against the property to shelter some of its income from taxes. • Income producing Real Estate is a stable investment not subject to the volatility of the stock market. • You could realize a 20 - 30% annual return on your investment |
