A few years ago my life was changed by a man who taught me about buying and selling residential real estate. He is an investor and owner of a real estate education company called ICG (International Capital Group). There are many lessons to be learned from this man about real estate, so check out his site for more info (ICG), but I will comment on the main lessons that I have learned from him.
1. The main lesson that I learned was that in residential real estate you get the absolute best loans. You can put 10% down for a house and finance the other 90% on a 30 year fixed mortgage at a low rate. His teachings highlight this fact because of inflation alone, over 30 years , you will make money on your home. This is why most families have the most amount of equity in their homes. For example, your $1,000 monthly payment will still be $1,000 a month , 30 years from now. However, if you are renting this property out for $1,000 a month, in 30 years, that same house could be renting for $5,000 per month. For more info on this concept , click here!
2. The second reason residential real estate is great is because of the tax breaks. The government actually lets you depreciate your rental property because it is property. This means that even if your property increases in value (which most properties do) you still get to write off up to $25,000 in tax depreciation expense. This means if you made $25,000 of income at your job and your property has a depreciation of $25,000 , you actually owe zero taxes. *Of course see your accountant for professional advice as I am not a professional.
3. The third reason residential real estate is great is because you have the biggest market of buyers, sellers, and renters. When entering or exiting a real estate market, you will always have a market to buy or sell from. Every American family either wants to buy or rent a home , and I don't see this trend changing in the near future. Also, almost always, the price of the property will rise over time, because of the population growth and families wanting to buy homes in good areas (He stresses to buy in good areas with good schools).
I have witnessed this man who was a millionaire when I met him in 1998 , turn in to a multi-multi millionaire! I can estimate that he owns more than 500 homes in the US and has diversified into commercial projects as well. If you get a chance you should read his book because he breaks real estate down to a level where anyone can understand it. He started with almost nothing, and turned a few rental properties into $100 plus million of real estate. His current idea about real estate is to buy in the midwest and south because of the baby boom population retiring and moving to warmer climates. He projected that property in the bay area would stay the same but that property in surrounding areas would decrease, and he was right. He also predicted the real estate boom that happend in Las Vegas and Arizona from 2000-2005, and made millions off of buying and selling homes in those areas.