From getting a stable income, financial security to an opportunity to bid farewell to your 9-5 job, here are some striking benefits of real estate investments.
Real estate is still an attractive investment. In fact, it has been more profitable than the stock market since 2000, returning 10.71% annually.
Thanks to the ever-increasing home needs among millennials, lower interest rates, favorable economic indicators, and government subsidies. As the industry is on the boom, more and more people are putting their money in real estate. According to one survey, nearly 63% of Americans own or have some form of investment in real estate.
Here we have rounded up some striking Financial Benefits of Real Estate Investment
1. Fixed Income
This is one of the key reasons why people invest in real estate. Cash flow from real estate usually remains steady and far more predictable than other ventures. This cash flow can be used to build your business or for buying a rental property.
That said, it’s important to choose the high yielding property. In other words, look for the good cash flow properties to maximize your ROI. For example, urban cities or town with colleges are likely to reap higher income because of the ever-increasing demand for student accommodation. The key here is to choose a prime location to get a great ROI on your investment.
Savvy investors invest in multiple rental properties all at once to boost their cash flow and expand their real estate investment portfolio.
2. Tax Benefits
As an added bonus, you will get several tax exemptions on your rental property. For example, the government doesn’t impose self-employment tax on rental income. Plus, the government offers tax breaks for insurance, maintenance repairs, travel expenses, legal fees, property taxes, and property depreciation. Real estate investors also enjoy lower tax rates on their long term investments depending on their location. Could you ask for more?
Real estate is a low-risk investment and immune to inflation. For example, you can increase your rent to keep pace with the general rise in the price level. This way, you will never lose money on real estate investment due to inflation. Moreover, the rise in the price of real estate is more than inflation (that’s called appreciation). The average annual real estate appreciation has been more than 6%, while the annual inflation rate hasn’t gone over 4%.
4. Multiple Financing Options
Are you running short of money to make a real estate investment? Don’t worry! There are many ways you can invest in real estate with a little amount of money. There are various options being offered to investors so that they can invest without breaking the bank.
For example, making a REIT investment will require you an investment of a few hundred dollars. Entering a partnership is another way to start a venture with little capital.
When you purchase a rental property, you can make a 20% down payment while the rest of the payments can be covered by the rent. Even if you are not approved for a loan, you can opt for private money lenders or hard money lenders.
5. Long Term Financial Security
Long term financial security is another benefit you get with real estate investment. With a fixed source of income by your side, you enjoy financial rewards for a long time. Possessing a rental property also offers a sense of security as the value of a property is likely to increase over time. After all, land and buildings are the most sought after assets in today’s time. However, the value of the property is determined by its location. Therefore, make sure to research the location before closing the deal on the property of choice.
So this is how in real estate can benefit you. However, there are many factors to keep in mind while making an investment.
Know the Market:
Keep a close eye on upcoming trends in the property market. Here you need to take a note of the growing population and increasing home demands in your city.
Know When to Exit:
What if you have to sell the property due to bad tenants, poor management, emergencies or other investment?
Therefore, be ready with a solid exit strategy.
Own the property for at least 5-7 years so that you can pay off principal while earning high equity.
Build a Network:
Sometimes it is cumbersome to do the things on your own. Therefore, start building your network with attorneys, contractors, handymen, accountants, real estate agents, and appraisers. This network will matter the most when it comes to legal complications or repairing.
Don’t Forget Ethical Practices:
Like other ventures, real estate is built upon trust and transparency. Practicing these ethics will benefit your image in the long run.
To make a profitable real estate investment, many things come into play. Do you know how to choose the property? Do you know how to close the deal? Do you know how to market your property?
At REI Nation, you get real estate coaching from industry experts. We make sure that you enter this profession with skills, knowledge, confidence and some “tricks”.
What do you think? Do you want to know more about real estate? Please let us know by commenting below.