Howard Wilner on the Pros and Cons of Real Estate Development
Investing in real estate has proven to be very successful for many, but it takes serious consideration, time and energy to be among the chosen few who make a living at real estate development, says Howard Wilner, President of Automax Preowned and a real estate expert based in Massachusetts. That’s why it’s so important to consider the benefits and drawbacks of real estate development before you decide. Depending on your unique financial circumstances, real estate development may (or may not) be the right investment for you.
There are three reasons why people choose to invest in real estate: to generate income, for their own personal use, and because of capital appreciation in the real estate industry. Today, we talked to Howard Wilner of Automax Preowned to share his expertise about the benefits of real estate investment.
Real estate is Valuable
Over time, real estate has proven itself to be one of the most solid investments, and real estate appreciates over time. This means that, in general, you can always sell real estate at a price higher than what you paid for it. This makes real estate an attractive investment option for many.
Tax Benefits
Purchasing real estate allows you to receive tax incentives as a property owner. This is particularly true for those who choose to rent out their properties as landlords. Landlords can deduct mortgage interest, depreciation value, repair costs, insurance, and much more.
Additional Income
Perhaps the most obvious benefit to investing in real estate is additional income. This is a great option if you are looking to supplement your income or reduce your own debt. In many cities, rental properties are a lucrative investment, offering you a steady stream of long-term rental income. This can also help you to build up your own retirement fund, leaving you in a much better financial position.
There are also some downsides to real estate investment which are important to be aware of, according to Howard Wilner.
Time Consuming
Purchasing, renovating, selling and/or renting real estate can be an extremely time-consuming process, says Howard Wilner. Many people purchase real estate expecting it to require much less time than it does. The truth of the matter is, it can be extremely difficult to balance a full-time career with real estate investments ‘on the side’. Anyone considering investing in real estate should be well-aware of how much free time they must dedicate to improving, cleaning, renovating and renting out their properties. It can easily become a second full time job that you need to be prepared for.
Risk
Real estate investment doesn’t always pay off. In some cases, you may be faced with a tenant who has damaged your property, or you may run into a costly repair which you did not anticipate. Investing in real estate should only be done when you have enough income available to properly ‘cushion’ yourself against the possibility of unexpected damage or repairs.
Mortgage Debt
Taking on an additional mortgage to purchase a property may be very difficult for some — especially for those just starting out, states Howard Wilner. Once again, it is very important that you have some ability to ‘cash-flow’ as much as possible when considering down payments and the costs of repairs and improvements.
No matter what you do, Howard Wilner suggests speaking with a financial planner to be sure you’re making the best decision for you and your family.
Read Howard Wilner’s article on Commercial Real Estate Trends.
