by Theresa Bradley-Banta
Why invest in real estate?
Here’s a fun short answer…
Years ago I worked with a woman investor. She would walk into a property she was thinking about buying and gleefully say, “Hmmm. It smells like cat pee!”
What she was referring to was the acronym “CATP” as in,
- Cash flow
- Taxes (benefits)
- Principal paydown (building equity by paying down a mortgage)
Imagine the surprised looks she received from sellers and seller’s agents!
A shocking thing to say? Perhaps. Memorable? Definitely!
When my friend made her “cat pee” comment she was also noting that a property wasn’t necessarily beyond hope. She knew she could fix it up and make a profit.
And that’s one of the great things about investing in real estate. It’s a tangible asset.
Real estate historically has been a safe, sound, solid investment. It tends to go up in value, provides cash flow from rental income and offers tax benefits and incentives.
Over time equity value increases as your loan is paid down.
And with some real estate investments you can force appreciation by making improvements to the property—improvements to management and operations and through upgrades and renovation.
In a nutshell, CATP is what real estate investing is all about. And what a simple way to remember the benefits.