Everybody needs to invest for their retirement. Investing in stocks and/or bonds is standard practice for all responsible working adults. Investing in real estate in Sioux Falls is another great option, but it can be intimidating, as it involves a lot of learning. Here is an overview of the main things to think about when considering buying real estate in South Dakota.
In real estate you are investing in something diversified from stocks and bonds. Because your purchase is a physical property located in Sioux Falls, you have a lot more control over this investment than over stocks and bonds.
Benefits of Sioux Falls Real Estate Versus Stocks
Stocks’ profitability comes from going up in value and being sold when it’s up in value. Profit also comes from dividends. This profit is subject to capital gains taxes, so a dollar earned is a dollar minus capital gains tax.
Real estate’s profitability, on the other hand, comes from an increase in value, cash flow, principle reduction (when a loan is used), and depreciation (tax benefits). Because of the tax benefits from depreciation, dollars earned from real estate are worth more than dollars earned from your job or the stock market. In addition, the ability to use other people’s money for the purchase of real estate, i.e. a loan, gives a better return on your cash investment.
Cautionary Note about Buying Real Estate
Of course, education is essential for success when investing in real estate.
Real estate is a commodity. Depending on the market, there can be good and bad times to buy. It’s all about the timing.
Bad Signs When Purchasing Real Estate:
- Houses are selling the same day they are put on the market
- Houses are selling for a higher price than they’re listed at
- Low interest rates, as this drive the price up
Good Signs When Purchasing Real Estate:
- Houses are on the market for 6 months; this causes downward pressure on the price
- High interest rates, as this drives the price down
Always remember to run your numbers and do your calculations. Contact us so we can help ensure your numbers work!