Multi family buildings arenâ€™t cheap, so why would you want to invest in them? Well, for starters how about tax benefits, long-term appreciation, the peace of mind of a tangible asset and renters who pay the mortgage for you?
Owning real estate confers some profitable tax benefits. For one thing, real estate is a depreciable asset, since structures have a finite life associated with them. Thus, the IRS understands that you will have to perform repairs and maintenance as your building agesâ€¦thus, you are allowed to depreciate the multi family building, much like you would with a company vehicle.
Tax benefits donâ€™t stop there. If you have a mortgage on the multi family building, you can take a deduction for the interest you pay on the loan. In the early years of ownership, when the majority of your payments are interest, this can be a very lucrative deduction.
Then there is the 1031 exchange rule which allows you do defer paying capital gains when you sell, so long as you buy a property of equal or greater value within a certain time frame.
If youâ€™re looking to build true wealth, more Americans have made their fortunes in real estate than via any other vehicle. Long-term appreciation in real estate generally outperforms the stock market, since real estate cannot go to zero value because land never disappears and is always worth something. Thus, property appreciation builds wealth for you without you having to lift a finger.
Then thereâ€™s the peace of mind that comes from having a tangible asset that you can drive past, point to, and say, â€œthatâ€™s my multi family building!â€ If you have doubts about the condition, you can walk in and inspect it.
Lastly, the rents that you receive from owning a multi family building should more than cover the mortgage payments that you make on that building. Thus, the renters are paying the mortgage for you, and at the end of the loan period they donâ€™t own it â€“ you do!
With all these advantages, it would be foolish to overlook the benefits that owning your own multi family building can confer up on you and your financial futureâ€¦and that of your family.
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