The Green House

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Do apartments make good investments?

In the past, investing in apartments was considered a bad choice compared to buying a house or a duplex. The truth is that the value of the real estate is given by the land and this is the reason why you should invest your money where the land value appreciates for years to come. While it may be safe to think that a house is a good investment, the fact is that it is not. There are many reason why you should consider investing in apartments for sale Charlotte.

The investment returns

The cash flow is the most important benefit of buying condos or luxurious residences. You are able to get even more cash flow than with rental houses. Even the most conservative and low-yielding apartment is likely to offer healthy returns. Investors are interested in the cash flow that can range from a few percent to the mid-teens per year. Since you are paying your own loan, this will add to the return you are making either that you decide to sell the building or if you pay off your loan. The result is immediate increase in monthly income. The principal reduction may not seem as like a major contribution to your returns, but keep in mind that the mortgage increases the impact of the mortgage.

Why invest in apartments, exactly?

The reason houses are more likely to appreciate is that they have more buyers, while condos only rely on income to increase their value. However, flat buildings have additional value derived for them in the future, meaning remodeling, and conversions or rebuilding. What many investors may not know is that only one apartment building can bring you revenues equal to that provided by 20 little houses. In addition to this, a 20-unit building helps you keep down maintenance expenses. Your responsibilities are clearly defined, meaning that the relationship with your tenants is straightforward.

Tax advantages

Similarly to other forms of real estate, you can write off all your expenses with the goal of reducing your taxable income. In other words, you can use the proceeds from selling the condo to buy more real estate investment or you can defer from capital gains and recapture taxes. Equally important is that you can further reduce your tax liability by depreciating the apartment and writing off a portion of its value every year. Unlike commercial real estate, apartments depreciate in about 27.5 years.

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