Preston Seo, @thelegacyinvestingshow on TikTok, is a real estate investor teaching financial freedom to his 2.4 million followers. His mission is to help his viewers achieve success and live without financial burden.
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Chosen as a Top Money Expert by GOBankingRates, here Seo provides advice on investing in real estate in today’s market.
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What do most people not know about real estate investing that you wish they knew?
People often don’t realize all the ways real estate makes you wealthy. There are 5 in fact:
1) Cash Flow. This one is the obvious one that most people know about. Your Rental Income – Expenses = your cash flow each month. Make sure to set aside reserves for maintenance & capital expenditures too.
2) Appreciation. Historically speaking, real estate appreciates at a 6% clip each year.
3) Loan Paydown. On rental properties, your tenants are paying down your mortgage for you thus increasing your equity position.
4) Inflation Hedge. This is one that most don’t know about. Inflation erodes away the purchasing power of our dollar each year. In the same way, inflation also erodes away the mortgage on your rental property. Your loan today is easier to pay back as wages and prices increase over time.
5) Tax Benefits. So many great tax strategies that real estate offers. 1031 exchanges, depreciation, bonus depreciation, etc. It’s why so many who own real estate pay very little in taxes compared to their income.
What are the best types of real estate investments to make in 2023 and why?
I think it all depends on your desired lifestyle, access to capital, and the types of returns you’re looking for. The beauty of real estate investing is that there are so many different ways to make money. I also think it’s important to adjust to current market conditions to hedge against risk.
What investments should they avoid?
As always, do your own due diligence when it comes to any type of investing. Never overextend yourself. I always say only invest what you’re comfortable losing. Once you educate yourself on the particular investment you’re looking at, take action. Standing on the sidelines will never get to where you want to be.
Jaime Catmull contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: Millionaire Investor Preston Seo: Here’s What Everyone Needs To Know About Investing in Real Estate in 2023
