Benefits of Investing in Palm Beach Real Estate

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benefits of investing in Palm Beach real estate.

Real Estate is one of the fastest growing industries in the country right now. There are many investment opportunities open for the taking. ‘The next 24 months look doggone good for real estate” said one lender at a major financial institution. There are numerous benefits of investing in Palm Beach real estate.

Benefits of Investing in Palm Beach Real Estate, Market Trending Up

Last year Palm Beach County saw its housing market increase by 8.41%. The taxable value stood at $165.1 billion which is just short of the $169.5 billion reached in 2007. $169.5 was the highest ever recorded in Palm Beach County. This number could mean higher bills come tax season, but it is also good new for those trying to sell their homes. This housing market increase is great to see as it is just five short years ago the housing market crashed. Since 2012 home values have recovered nearly 46%. Some economists are predicting some international factors will also play a role in Palm Beach County real estate. Some economists believe that Brexit could end up benefiting the real estate market in Palm Beach County. The thinking behind this theory is that a slumping London could send investors to other global hubs, such as Miami.

Benefits of Investing in Palm Beach Real Estate, Real Estate Over The Stock Market

When most people think of investing they automatically think of the stock market, however, some of the best investors look to invest in real estate before the stock market. There are many benefits to investing in Palm Beach real estate.

  1. Long Term Returns
  2. Taxes for Income
  3. Taxes on Selling
  4. Inflation
  5. Leverage
  6. Digital vs. Real

Benefits of Investing in Palm Beach Real Estate, Long Term Returns

Over certain time periods, stock index funds can underperform inflation. These time periods are not always short either; they can even last several decades. Real estate has not underperformed inflation in over a decade.

Benefits of Investing in Palm Beach Real EstateTaxes for Income

Some advantages of investing in Palm Beach real estate is that it can also help you lower your taxes. You can deduct your mortgage interest and also if your home value depreciates. These are not possibilities when investing in the stock market.

Benefits of Investing in Palm Beach Real Estate, Taxes on Selling

When anyone sells a stock, they pay capital gains tax. However, when you sell real estate, this is not always the case. In certain cases, you can put the proceeds into a 1031 exchange. In a 1031 exchange, you can defer paying the capital gains tax. To qualify for this tax exemption, the homeowner must own the property for two years and live in it for 2-5 years. If you do qualify, up to $250,000 in sales gain is tax-free. Because of this, buying another property within a given amount of time can actually help you save money. This tax-free capital gain is just one of the many benefits of investing in Palm Beach real estate.

Benefits of Investing in Palm Beach Real Estate, Inflation

If you get a fixed-rate mortgage, your biggest expense is set for around 30 years or so. Your cash flow profit margin should increase from year to year because you can raise the rent while paying the same mortgage rate. This is not possible in the stock market.

Benefits of Investing in Palm Beach Real Estate, Leverage

The practice of buying stocks on the margin is very popular. If you type what is buying stocks on the margin into google, you will get this answer “Buying on margin is the purchase of an asset by paying the margin and borrowing the balance from a bank or broker. Buying on margin refers to the initial or down payment made to the broker for the asset being purchased.” This can be a very dangerous way to invest. It allows people and institutions to become aggressive and try to buy more shares of a company than they can afford. Marginal interest rates are sizeably higher than interest rates on loans for real estate. Lastly, margin loans get called back if your stocks fall below a certain threshold. Most of the time, real estate loans only get called back if you stop making payments

Benefits of Investing in Palm Beach Real Estate, Digital vs. Real

Another benefit of investing in Palm Beach real estate can also be more fun than investing in the stock market. When you invest in the stock market, you either do it over the phone or from your computer. Once you have bought the stock, there is nothing else for you to do. When you invest in real estate, it is tangible; there is more to do after you make the purchase. For example, if you buy a home you plan on renting or what is known in the real estate world as “flipping” there is a lot to be done after your purchase goes through. When people rent out or flip a house, they almost everytime try to improve the place. Some improvements can be small by just adding a few new appliances or a new paint job to the exterior of the house. Certain home improvements can also be very large scale like adding a new room or refurbishing the entire house. These tasks can be enjoyable to certain people who like redoing homes.