Why Invest In Real Estate?

Most millionaires have a significant portion – if not the majority of their wealth in real estate.
Real estate is always in demand because no matter what happens to the world in terms of politics or economics, people will need places to live, businesses will need places to operate, governments will need places to function. Below are 5 points as to why you should invest in real estate.

1. FINANCIAL INDEPENDENCE
Most of your income comes from passive sources so you don’t work if you don’t want to.
For you, financial independence might be $1,500 per month
It’s not how much you make, it’s what you do with it that counts!
If you earn $1 million and spend $1.2 million, you don’t have wealth. If you are using credit to buy depreciating assets like clothes, cars, jewelry, or anything else that goes down in value, you’re digging yourself into a hole that can be very hard to get out of.
Not all debt is bad. When you use debt to buy things that increase in value and generate profits, you are thinking and operating like a wealthy person. The idea is to spend as much of your money as possible (after you pay for your necessities) on appreciating assets: assets such as real estate or any business that will go up in value and generate profits. Then you can afford to buy depreciating assets because you can afford to buy them with cash.

2. THE LAW OF LEVERAGE
Investing in stocks or bonds requires a lot of cash. Investing in real estate will require a lot less.
What other assets can you think of where banks will lend even close to 100% of the value of the asset and you still make all the profit?

3. MANAGEMENT
You don’t have to quit what you’re doing to start making big money in real estate. Most people start part-time. As an investment, real estate completely puts you in the driver’s seat. When you buy stocks, you don’t have control – you’re investing your money in a company, but its officers and directors will decide how the company will operate.

When you buy precious metals, gems or collectibles, you’re at the mercy of the market.
But when you invest in real estate, you have control. You make the decisions. You make the money.

Think about it this way: if someone offered to pay your mortgage for a year and all you needed to do was invest 40 hours a year into maintaining and managing the property, you would do it wouldn’t you? Of course you would.

I. It gives you the right amount of control over your destiny.
II. It’s a turn-key management style. You can easily hire someone to fulfill necessary duties or subcontract out the tasks.
III. It’s not very “paperwork intensive”
IV. Great court system in place to handle disputes.

4. TAX SAVINGS
There are some great ways to avoid income taxes with your real estate investing.
1. Depreciation, interest, and expense deductions.
2. 1031 Exchanges.

Consult with your tax advisor because everyone's situation is different.

5. PREDICTABILITY
In Hennepin County, Minnesota has averaged a 6.43% decrease in value per year over the last 5 years. See the table below.

Average Sale Price in Hennepin County

Quarter,Yr Avg. Sale Price Price Change
Q 4, 2006 $305,300 --------
Q 4, 2007 $301,800 -1.18%
Q 4, 2008 $251,800 -16.57%
Q 4, 2009 $224,000 -11.04%
Q 4, 2010 $233,400 +4.03%
Q 2, 2011 $216,100 -7.41%

However, from 1980 to 2001, the value of real estate has been consistently rise for an average of 6% per year nationwide. Since 2006, the value has decrease, we can safely predict that the value will decrease for another few more years. Overall, the last 200 years, the value of real estate national has steadily increase.

Real estate value has been decreasing since 2006. Also, the mortage rates are in the 5's and lower. Take advantage of the lower prices and low interest rates. The rental market is also very strong here in the Twin Cities. There's never been a better time to buy real estate than now.