The times, they are a changin’. Real estate investing and real estate loans have always been lucrative, albeit packaged with some major warning signs. Yet if industry experts are to be trusted (which we do), this longstanding reputation no longer holds water; according to a recent report from Entrepreneur.com, real estate is now being heralded as the smartest investment you’ll ever make.
So toss out whatever urban myths you’ve been led to believe about real estate loans and investing and clear a spot at the table for a fresh spread of new information, because here are three real estate truths that will turn whatever notion you have about real estate investing on its head.
1. Positive Cash Flow
One of the most attractive aspects of any income-producing real estate investment is that leases typically secure the assets. This means that the amount of regular income produced from real estate investments is noticeably higher than what the average stock dividend yields.
2. Use of Leverage to Increase Asset Value
Commercial real estate investing allows debt to be placed on the asset, which is typically multiple times the original equity. As a result, investors can snap up more assets using less money, increase asset value tremendously and multiply equity – all while simultaneously paying down on their real estate loans.
3. Use of Leverage to Grow Cash Flow
Both equity and debt leverage can both be used to gain and control more asset value – but that’s not all. They can also be used to acquire more cash flow. Entrepreneur.com states:
“Placing “positive leverage” on an asset allows for investors to effectively increase positive cash flow from operations by borrowing money at a lower cost than the property pays out. For example, if a property generating a 6 percent cash-on-cash return were to have debt placed on it at 4 percent, the investors would be paid 6 percent on the equity portion and approximately 2 percent on the money borrowed, thereby leveraging debt.”
The Perks of Real Estate Investing
This is actually only a small portion of beneficial information regarding the current climate of real estate investing – the list of perks involved in the industry are plentiful. All it takes is a little bit of self-education and experience to create a steady, comfortable income from real estate investing.
Contact Gravity Capital
Interested in learning more about real estate loans and investing? Gravity Capital can answer all of your questions. Contact us today or fill out our easy online application to jump-start the loan process.