Real Estate is arguably the best investment in the world. Income. Equity. Tax breaks. A hedge against inflation. The benefits that come with investing in real estate are enormous.
There can be some risk associated with investing in real estate, though. It's important to understand markets and how to choose properties that are going to grow in value over time. They don't always pay off, and if you invest poorly, you can lose money.
However, if you understand the risks, do your research and evaluate the benefits in detail, in can provide a nice source of income. Here are some of the biggest benefits and potential risks that come with it.
What is Real Estate Investing?
There are many ways to invest in real estate. You can buy a sing-family home, rent it to someone, and collect the monthly rent check. This can give you a nice source of income and also allow you to wait for the property value to rise. When it does, you can sell, making a profit, or you can cash-out the equity to purchase more real estate or make improvements. You can also buy commercial real estate and rent it to businesses.
If you want to leverage more time and money, you can invest in apartments, allowing you to multiply your profits.
The biggest thing is to research what type of real estate investing is the best fit for you.
10 Reasons To Invest In Real Estate
Investing in real estate, like any investment, includes some risk, but it can provide a lot of cash to your bank account. Here are some benefits of investing in real estate.
DISCLAIMER: Nothin is guaranteed in real estate investing. You must do your own research.
1. Cash Flow
Real estate investing is a great way to raise your income. Whether your purchase residential real estate or commercial real estate, you can rent to tenants, producing passive income. You'll receive recurring checks from the renters in the form of checks. Remember to check payment history prior to renting to a tenant, though.
2. Profitable Returns
As real estate appreciates over time, you can sell it for a profit. You can also cash out equity to use in additional home purchases. As a reminder, appreciation is never guaranteed, though.
3. Hedge Against Inflation
Even if inflation is on the rise, and the dollar is losing value, often real estate continues to raise in price, allowing your money to stay safe from depreciation. In high-inflation markets, real estate can be a phenomenal tool. When prices or goods and services are rising, most of the time, real estate prices and rents do too. Therefore, even while you're paying more for normal living, your investments make you more, as well.
4. Tax Advantages
Investing in real estate comes with tax benefits. You can deduct several expenses associated with owning an investment property, including your property taxes, mortgage interest, property management fees, property insurance, the costs of ongoing maintenance, the cost of repairs and the money you pay to market your property to potential renters. If you sell your property for more than you paid for it, the gain you realized won't be taxed as income. Instead, it will be taxed as capital gains, which typically come with lower tax rates than does income. If you invest in opportunity zones – neighborhoods that are in need of investment – you'll pay even less in capital gains.
During economic turmoil, often, the investors who are diversified are the ones who feel it the least. Real estate investing can offer you protection against other sub-markets, like stocks and bonds, so even if they are going down, your real estate may still be on the rise. This can protect you against losses you take in other investments.
6. Passive Income
Real estate investing can provide passive income alongside additional sources of other income. Your investments can still be making you money without having to work everyday. A lot of people start their investing career while still working full-time. Isn't that amazing?!
7. Leverage Debt and Other Funds
Very few people can afford to buy real estate with cash. Being able to take out a loan to invest in real estate solves this problem. You get to use other people's money to purchase properties and grow your wealth. Banks, mortgage lenders or credit unions can be a source for your loans, and you'll pay them back over time. This allows you to leverage your savings to potentially buy additional properties in a shorter amount of time.
Real estate is often a long-term investment, and you can hold on to it for several years. In the meantime, you can rent it out, making recurring income.
9. Build Your Net-Worth
The obvious goal of investing in real estate is to grow your net worth and own assets that pay you. When you sell a property that has risen in value, you generate revenue and boost your cash assets. This can be a vehicle for you to repeat the process of invest in other things. Over time, you can buy more valuable properties and make bigger profits. The key is to make sure you're making smart decisions and buying the right properties.
10. Fulfill Your Mission
When you own real estate, you control what you do with your money and how it gets to work for you. At the end of the day, it's a vehicle for you to fulfill your dreams, contribute to your family and community and be a positive influence on your country.