Real Estate Insights

Real Estate Books

  • Ken McElroy – The ABC’s of Real Estate Investing
  • Rod Khleif - How to Create Lifetime Cashflow Through Multifamily Properties
  • Frank Gallinelli – What Every Real Estate Investor Needs to know about Cash Flow
  • Brandon Turner – The Book on Rental Property
  • Gary Keller – The Millionaire Real Estate Investor
  • Michael E. Gerber – The E Myth Real Estate Investor

Personal Development Books

  • R. Donahue Peebles - The Peebles Principles
  • Robert Kiyosaki – Rich Dad Poor Dad
  • Denis Kimbro – Think and Grow Rich A Black Choice
  • Darren Hardy – The Compound Effect
  • Brian Tracy - Million Dollar Habits
  • Ray Dalio - Principles

 

Recession-resistant:

  • Apartments tends to do well despite drops in the economy.
  • More land will not be created, but our population will increase.
  • Occupied units are increasing causing a higher demand for apartments.

 

Cashflow plus appreciation:

  • Adding value through renovating
  • Value add through reducing the property expenses
  • Causing monthly cashflow to increase
  • Increasing the overall value of the property
  • Creating a potential higher refinance option and a higher sale price.

Tax Preferred:

  • Uncle Sam gives advantages to real estate investors.
  • Real estate investors provide rental housing to people who can’t, or just don’t want to buy homes.
  • To encourage us to do that, the government has written several great things into the tax code.

 

Tax-free income:

  • Rental income - is not subject to payroll taxes
  • Depreciation – reduce taxes, based on normal wear and tear of the asset
  • Deductions – expenses such as property management, mortgage interest, repairs, etc.
  • Capital gains deferment – there are ways to even defer your capital gains tax
  • Passive losses – report a loss against your total income, but still collect cash flow from your investment.

(Disclaimer: I am not a CPA and this in no way should be constituted as professional tax advice. Every situation is different, but these are some common benefits that people generally experience with real estate investing. They may not apply in all cases.)

Why Invest In Real Estate over Stocks

Innovative individuals continuously introduce new companies to the stock market, driven by their creative ideas. As an increasing number of people engage in investing, stock prices follow their traditional pattern of fluctuations. While it's accurate that mature stocks often recover after a decline, relying solely on them as your primary retirement savings or wealth-building strategy may not yield the desired results when it comes time to retire.

  • I witnessed this scenario during my tenure at a large corporation in the vicinity of 2009. A significant number of my colleagues experienced distress as they witnessed the substantial decline in the value of their stock investments. Some individuals loss their entire investments. The challenge they faced was that the market underwent rapid changes, preventing them from reallocating their funds to safer options in a timely manner. Consequently, they were compelled to reevaluate their retirement strategies. They frequently had to delay their retirement plans, hoping for a stock market rebound while maintaining optimism about health and financial security.

401k Investing

Many employers typically provide their employees with a 401(k) retirement plan, primarily invested in stocks, along with an average company match of 50% on the first 3 - 6% of the employee's salary. However, if you find yourself in need of those funds before you reach the age of 65, you have the option to borrow a certain percentage, with the interest paid back to your own account. But it's essential to consider that if your selected stocks are expected to increase in value, repurchasing them later could be more expensive.

  • In the event of a substantial withdrawal, the penalties of approximately 10% and taxes amounting to roughly 20% need to be accounted for, resulting in an estimated reduction of around 30% from what initially appeared to be your own money.

Stocks are a great investment when the dice are rolled properly; however, stocks doesn't provide the safety a tangible asset can offer in a fluctuating economy.