Here at Turnkey Properties, we’re honored to be considered one of the South’s top real estate investment companies. We’ve earned that reputation by developing successful clients from around the United States who have properties in and around Memphis, TN and Little Rock, AR.
Along the way, we’ve gained quite a lot of experience, and it’s our pleasure to share that experience in any way we can. One great way we’ve found is to take some of the most frequently asked questions we’ve encountered during our 15 years as a firm and set out the answers for you guys right here! So, without further ado, let’s get into the FAQs of real estate investment!
Setting the Scene – What Is Real Estate Investment?
This one may seem slightly obvious, but you might be surprised how often this simple question comes up! And it’s a great question since before you can master something; you must have a deep and thorough understanding of the basics.
So in that spirit, let’s talk about what real estate investment is at its simplest. Simply put, it’s all about wealth creation! By buying properties with the purpose of selling them off at a higher price or allowing them to accrue value over time, investors like you can tap into a range of financial benefits. Real estate investing is such a fantastic strategy because it offers multiple income streams, like rental income from tenants or profits from property sales. Not only that, but real estate investing has the potential for long-term value appreciation. That means you get to build equity over time, and that’s one of the most powerful benefits of real estate investing.
What are the Tax Advantages of Real Estate Investment?
There are a bunch of them! Real estate investing offers many unique tax benefits to investors, especially when you pair investment with intelligent management and cultivation of your properties. By investing well in real estate, you can enjoy benefits such as:
- Depreciation – This is a big one. Since the IRS allows property owners to deduct a portion of the property’s value as a depreciation expense over its useful life, you can see substantial benefits if you invest correctly. This deduction is based on accounting for the property’s wear and tear and can lead to some considerable tax benefits. Depreciation can have the tremendous advantage of reducing taxable income so that you owe less taxes when all is said and done.
- Mortgage interest deduction – If you finance your investment properties through mortgages, you can deduct these interest payments from your taxes. This tip applies to residential as well as commercial property and allows you to reduce your tax liability and optimize your revenue stream.
- Property tax deduction – one excellent tax benefit of real estate investment is the ability to deduct any rental property’s taxes. Property tax, in general, is a big thing to keep in mind when it comes to real estate investment, but it’s important to remember that deductions can lighten the load considerably!
How Much Money Do I Need to Get Started?
Great question! And the answer is, perhaps a little frustratingly, it depends. Everyone has different limits when it comes to the initial investment, and everyone’s portfolio is going to be structured differently, requiring greater or lesser starting costs.
When it comes to getting started in real estate investing, you’ll want to look at factors such as the type of property, location, financing options, and your personal investment goals. It’s possible to get started with a range of budgets, from small-scale investments in single-family homes to larger commercial properties. Exploring different investment strategies and consulting with professionals can help determine the most suitable investment amount.
This is a big one when it comes to partnering with an established firm like Turnkey Properties that can guide you through the process!
Should I Be Investing in Commercial or Residential Properties?
Another great question! And another answer that really comes down to the individual. Ask yourself – what are my goals from an investment? Am I interested in managing a property long-term, or instead, would I want to see a quick turnaround for my money? How tolerant am I of risk? What is my understanding of the market conditions of the area?
Now there’s a lot that goes into each of these questions, but there are definitely some general guidelines to follow when it comes to answering this one. First off, residential investment tends to be a little easier to get started into for most investors, as it usually involves smaller initial investments, fewer tax and regulatory standards to follow, and less specialized knowledge of market conditions.
That being said, there are certain circumstances where it is more appropriate to get started with commercial investment. For instance, perhaps you’re highly knowledgeable in the business occupied by the space or that you plan to occupy the space with. Or maybe you have a particular insight into the market of that area. Again, it’s all about you, your interests, goals, and skillsets.
Should I Take Advantage of Decades of Experience By Partnering with Turnkey Properties?
We’re so glad you asked! And the answer, unsurprisingly, is yes! We work hard for our clients to put them in financially lucrative investment positions and have built up a significant portfolio over the years doing just that.
Clients love our ability to provide them with wealth-creation opportunities, but more than that, they love our commitment to partnering with them at every stage of the process. We have access to the best and most knowledgeable contractors and consultants, know the markets of Little Rock and Memphis better than anyone else, and are ready to leverage a combined 137 years of investment experience for you! Give us a call at 901-410-5452 or schedule a consultation, and we can get started on your specific goals today!