The benefits of investing in real estate include passive income, stable cash flow, tax advantages, diversification, and leverage. In this article, we explore the benefits of investing and common strategies for increasing positive outcomes.
BENEFITS OF REAL ESTATE INVESTING
As with all articles on this site, this perspective is only meant to be educational in nature and should not be taken as investment advice or guarantee. Please always discuss investment opportunities with a financial advisor to make the most reasonable and effective decisions for your specific situation.
RELATIVELY REDUCED RISK
While investing in apartments, commercial buildings, and single family homes can bring extra income and big paydays, they can also come with a risk. The goal is to invest in properties that will increase in value over time. One benefit of real estate investing is that it is secured by the asset itself–the building. It can therefore be a relatively smaller risk of seeing your investment lose value and if so, save for natural disasters or decrepit property conditions, reduced value may last only for a short period of time.
STEADY CASH FLOW
Investing in real estate is one way some people choose to increase their monthly income. Whether residential or commercial, real estate investments can often mean the opportunity to lease property to tenants. This means as long as the rental economy is a positive one, there is the possibility of receiving monthly income for years to come.
RETURN ON INVESTMENT
If the real estate you own increases in value over time, you can sell it for a profit. The real estate market is often considered to be a relatively safer investment as in many cases you can either make a return on investment or at least be able to have the value remain relatively steady over time.
Real estate is a long-term investment, meaning you can hold onto it for several years and wait for it to appreciate. In the meantime, you can rent it out and earn a monthly income while you wait for the property to rise in value.
Investing in real estate comes with tax benefits. You can deduct several expenses associated with owning an investment property, such as 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.
Adding real estate to your investments portfolio will boost your diversification, which can often provide added protection you in times of economic turmoil.