Steve Rozenberg enlightens us over why real estate as an investment has beneficial differences when compared to other types of investments.
While everyones “Why” is different, having real estate as their investment vehicle provides the lowest barrier to entry with little money down many times.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host.
Steve: Hi. This is Steve Rozenberg, and I am the co-founder of Empire Industries Property Management Company located in Houston, Texas. Today, what we’re going to talk about is why real estate is the better vehicle that I feel for investing. I am the host of the REI Classroom, and I’d like to welcome everyone here today.
Mike: This show is sponsored by PassiveRental.com.
Steve: So what we’re going to talk about is why real estate. Why is it something that people invest in or don’t invest in? I think it’s important to note that buying real estate is really just a vehicle to get you to what you want down the road. So a lot of people use real estate as that vehicle to get them that safe, secure retirement, or they use it for cash flow to live off of, and really it’s just a vehicle.
One of the reasons that many people do the investing for the safety and security is really that’s considered the what as to why they are investing. Then, the reason why they invest is obviously the why. They want to invest to have that safety, security, retirement, other things like that. Again, there are multiple ways that you can invest. You can invest by investing in real estate. You can also invest by paper assets, such as stocks and bonds. Or you can invest in intellectual property.
Real estate is just one of the vehicles that you can invest in and the what and the why, there’s numerous reasons why people do what they do. You just have to decide what is best for you in your situation, and what you are more prone to liking. Some people love real estate, other people hate it. I obviously am a big fan of it, and I’ll tell you why.
One of the main reasons I like real estate is, number one, it has the lowest barrier to entry. Meaning you can invest in a property and you can essentially buy a property with 20% down, let’s say. Some people can do it with 0%. But let’s just say you’re buying a property with 20% down. That means that you are getting the bank to loan you 80% of the rest of the money to buy that property. Now, there is no other investment that I know of, meaning stocks or bonds, or other intellectual property, that someone is going to loan you 80% and you’re going to be leveraged only 20% in an equity position on that deal.
Now, you have to think about this. You’re getting 80% of the money that someone’s giving you. They’re not asking for any of the appreciation, they’re not asking for any of the cash flow, and they’re not asking for any of the tax write-offs. They’re giving you all of that. The only thing they’re asking for is a small amount of interest to be paid back on the money that they loaned you. Again, I don’t know of any other entity that will do that, and you want to think about that as part of your plan, part of your exit strategy.
For example, when you’re exiting that property, if you’re going to roll that into another property, you’re not going to have to pay taxes on that if you don’t want to. You can do what’s called a 1031 tax deferred exchange. Now if you sold a stock, you would be paying taxes no matter what. So there’s a lot of benefits. The government likes the fact that people own real estate, because you’re providing housing for people, and that’s something that if you did not do that the government would have to do.
So you want to think that the government is more prone to help you. Again, my opinion is that real estate is the best thing that you are getting the highest return with the lowest barrier to entry for your money. That is why I feel investing in real estate is really the best way to go. So if you’d like to know more, you can definitely look me up online. Glad I could help you, and thank you very much.
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Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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