Before you set out to purchase an investment property, it’s important to ask yourself this question: Why?
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Why invest in real estate? To answer this question, I’ll underscore three main points today.
1. Diversification. Many of you probably have investment portfolios that include stocks or bonds, but it’s a good idea to diversify in case the economy undergoes a bit of a slump in one area. That way, your funds will be balanced, rather than concentrated in a single area.
2. Appreciation. Here in San Francisco and the Bay Area, we’ve seen home appreciation continue to accelerate, which acts as a hedge against inflation. Greater appreciation should be factored into your decision.
Greater appreciation should be factored into your decision.
3. Tax advantages. There are a lot of tax advantages to purchasing an investment property. I’d advise you to contact your CPA for more insight into those, but one, in particular, could be 1031s. Recently, the IRS has opened up new opportunity zones as well.
These are just a few of the many reasons to explore as you consider buying an investment property. If you have any questions or there’s a topic you’d like to see me cover in future videos, don’t hesitate to let me know. I look forward to hearing from you!