Email Dave Email
Residential Real Estate
Aug 1, 2015

Owning Real Estate Is An Effective Strategy For Building Wealth

Sponsored Content provided by Dave Sweyer - Owner and Broker, Sweyer Property Management

Compared with every other investment product out there, real estate has no equal. This point is compounded after considering that interest rates are still hovering at all-time lows, and purchasing real estate allows the investor to use the power of leveraging borrowed funds.

Leveraging is one of the chief advantages to investing in real estate. By obtaining a mortgage to acquire a rental property, an investor has the ability to leverage the borrowed funds to not only generate monthly cash flow but to also realize a gain on the underlying value of the property.

As an example, if an individual who spent $10,000 investing in the stock market achieved a 10 percent return on his investment, he might be excited enough about that $1,000 to tell his friends about it. If the same individual had spent his $10,000 investing in a rental property valued at $200,000, and the property had appreciated by 10 percent, his gain would have been $20,000.
Now that is something to get excited about!

This is not even taking into account the fact that the monthly cash flow generated by a real estate investment is typically much more significant than the cash flow that can be achieved by purchasing stocks, bonds or other types of securities. The monthly cash flow on a single investment property might not be life-changing, but seasoned investors can speak from experience about the positive returns associated with owning multiple properties.

There are a number of additional benefits that can be achieved by purchasing a rental property, such as:

  • Depreciation – This allows an owner of an investment property to deduct a portion of the property's value off his or her gross annual income. The best part is that depreciation is considered passive income so it is not subject to self-employment taxes.
  • Elimination of Principal – Although many of the payments in the first few years are mostly allocated toward interest, which is tax deductible, a small portion goes to the principal. The percentage of the payment that goes to the principal increases over time, and eventually the investor owns the property free and clear.
  • Diversification – It’s well known that diversification is a hedge against risk and an essential strategy for success for any investor. Since real estate returns have relatively low correlations with other investment vehicles, such as stocks and bonds, purchasing real estate can be an effective means of diversifying a portfolio.
Of course I would be remiss if I failed to mention one of the main drawbacks associated with investing in real estate: management. Maintenance issues will always arise, tenants will have demands, and accounting functions have the potential to eat up a significant amount of time.

Finding a highly qualified and reliable property manager is the key to success for any investor interested in maximizing his or her time. A property management company such as Sweyer Property Management will provide a range of services, including property advertising, lease preparation, tenant qualification, property maintenance, rent collections, security deposit handling, and income/expense reports. 

For information about our rates or to find out how to acquire a rental property, please send an email to our office at [email protected], or visit WilmingtonForRent.com.   

Sweyer Property Management has been providing real estate property management services and long-term rentals to the Wilmington area since 1987. The company continues to be the industry leader with more than 1400+ units and more than 20 employees. Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland and Hampstead areas while maintaining a 4.8 Google+ rating for customer service. To inquire about the company’s full-service management services, or to take a tour of houses for rent in the area, email [email protected], or visit WilmingtonForRent.com. You can also Like and follow the Sweyer Property Management Facebook page to get property management tips or see properties for rent.
 

Other Posts from Dave Sweyer

Sweyer animated 300x250 ad
Ico insights

INSIGHTS

SPONSORS' CONTENT
Mike stonestreet 300x300

8 Questions To Ask When Choosing A Professional Community Management Company

Mike Stonestreet - CAMS (Community Association Management Services)
Andybasingerliveoakprivatewealth headshot

Finding A Cure Instead Of Treating A Symptom

Andy Basinger - Live Oak Private Wealth
Mikeharrington carolinaretreats 2

Maximizing Your Property For Year-Round Guests (Part II)

Mike Harrington - Carolina Retreats

Trending News

Tomsic Assumes New Position With Dogwood State Bank

Jenny Callison - Jan 13, 2021

More COVID-19 Vaccine Doses Arrive, Providers Added To Administer Shots

Vicky Janowski - Jan 13, 2021

Q&A: Veteran Starts Her Own Real Estate Firm

Cece Nunn - Jan 15, 2021

Economist: Regional Economy Could See Light Going Into 2021 Tourist Season

Christina Haley O'Neal - Jan 13, 2021

Historic Wilmington Foundation Names Next Executive Director

Christina Haley O'Neal - Jan 15, 2021

In The Current Issue

Top 10 Most-read Stories Of 2020

The most-read stories of 2020 run the gamut from filming in Wilmington to some of the latest news about Port City-based firm Next Glass....


Predictions Mixed For Real Estate

Residential and commercial real estate in the Wilmington area is expected to thrive in certain areas and struggle in others this year....


USDA, NC Organization Honor Live Oak Bank

In mid-December, the U.S. De­partment of Agriculture Rural Department named Live Oak Bank its top 2020 commercial lender....

Book On Business

The 2020 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2020 Health Care Heroes
2020 WilmingtonBiz 100