Interested in investing in real estate but don’t know where to start?
Here are 5 benefits that passive real estate investment offers.
Access Intelligence of an Experienced Manager
It takes a tremendous amount of time and effort to become an expert investor. You don’t need to devote your life to learning all the nuances of real estate investing. Use the intelligence of the experts around you. Let them conduct the thorough due diligence required on all the various properties. Let them crunch the numbers and spend hours evaluating the best opportunities. You don’t need to quit your day job to devote the time required to analyze opportunities. Passive real estate investing allows you to profit from the experts’ knowledge.
Invest Without the Landlord Headaches
Midnight phone calls, building maintenance, and tenant demands can frustrate the most well meaning investor. Avoid the day to day hassles of real estate ownership. Passive real estate investment offers all the benefits without the landlord headaches.
Boost Your Returns with Leverage
Since real estate is a physical asset that generates consistent revenue streams, traditional financial institutions will typically be willing to provide a loan secured by the property, also known as a mortgage. The loan enables the investor to magnify his investment returns when the cash flow yield of the property exceeds the borrowing rate. This is known as leverage.
Reduce Your Tax Bill
Building depreciation can be treated as an expense against rental income. Oftentimes, when this is combined with traditional expenses (such as mortgage interest, property tax and insurance), it reduces the taxable annual income to zero. Unlike stock dividends which can be taxed at your highest tax rate, taxes paid on passive real estate investments are often deferred until the property is sold. This tax deferral lets you grow your money at a faster rate.
Investing in a Limited Partnership (LP) structure has the added benefit of allowing all the income and profits to flow through directly to investors instead of being taxed at the corporate level and then taxed again as dividends.
Eliminate the Financing Challenges
At Open Avenue, we love direct real estate investing. For real estate investors, it can be quite challenging and frustrating to qualify for and acquire direct financing on do-it-yourself properties through retail banks. Passive real estate investing relieves this pressure by letting you rely on an experienced professional to manage the real estate financing process.
Open Avenue is a passive real estate investing platform that gives you all these advantages and more. View investment opportunities here or get in touch to learn more.
By Tim McKillican