Why should you invest in real estate
Are you a retiree or you are someone who is looking forward to investing in a life time business to immerse wealth and equity? Real estate is the best option for you, this is because you not only generate income by investing in it, it is also a means of increasing your property value overtime.
There are features you need to know about real estate investment, the benefits of investing in real estate, and why investing in real estate is a good idea. First and foremost, I will like to give a brief introduction to what real estate Investment is.
What is real estate?
Real estate investment is the purchase, sales of any property that consist of a land with buildings, livestock, mineral resources, on it for the primary purpose of earning money.
The Pros and Cons of Real Estate Investing
- Ability to Use Other People’s Money to Invest.
- Reduced Volatility.
- Unparalleled Tax Benefits.
- Appreciation Potential.
- Cash Flow = Passive Income.
- Steep Learning Curve.
- Property Management.
- Carrying Costs and Exit Strategies.
There are several types of real estate that coexist and they include:
- Residential real estate: the residential real estate comprises of houses for individuals, families, etc. basically it can be defined as an area designed for people to live in. in the residential real estate, residents may rent or own the houses they live in.
- Commercial real estate: commercial real estate as the name implies is a property used solely for business instead of a residential area. Examples include; hotels, restaurants, etc. in short, it is an area leased out to tenants for work space.
- Industrial real estate: this is a property that solely serves an industrial business purpose, they include; warehouses, factories, industries, etc. They are landed property used for industrial purposes.
- Land: this include vacant lands, ranches, farms, undeveloped and developed.
investing in real estate comes with a lot of benefit which include a monthly or annual income source, stable cash flow, diversification, leverage, etc.
Having explained what real estate investment is and the different types of real estate that exists, let’s check out why investing in real estate is a good idea
11 REASONS WHY YOU SHOULD INVEST IN REAL ESTATE
1. Income (increase in flow)
The main aim of starting a business is to generate profit, no one wants to start a business for starting sake or for show off, as a matter of fact, the main aim of any business should be to help your audience thus producing value and once that value is given, you begin to generate profit, investing in real estate is a life time investment where you get an annual or monthly cash flow, and one interesting thing about the cash flow is that once you have paid your mortgage payment and operating expenses, your cash flow increases
2. Appreciation (increase in value of real estate)
Another intriguing fact about investing in real estate is that Real estate appreciates in value, and its value increases over time. Most real estate investors earn their money from rental income, property-dependent business and appreciation. Rent increases over time, an increase in rent
equals increase in cash flow
3. Equity and wealth creation
When you purchase a property and you pay down the mortgage, the value of your property increases while the price of your mortgage reduces as you pay regularly. This results in increased equity and increased wealth.
Leverage is one of the most important benefits of real estate; it is the use of borrowed capital to increase the returns of an investment. Leverage is said to be done when a mortgage is used to reduce the amount of capital needed to purchase a property, by Real estate is a tangible asset, financing it is readily available.
5. Diversification of portfolio
A whole lot of investors seek measures to spread or mitigate the risk of their portfolio, some diversify their funds into various assets, and Investing in real estate is also a means of diversifying your portfolio. To diversify means spreading out risk, mitigating risk, real estate is one of safest the ways to mitigate risk in your portfolio.
Depreciation is a process acceptempd by the tax code to permit investor depreciates the value of an investment property over time. Another unique factor is that the value of an investment property appreciates over time, hence, depreciation allows a real estate investor generate an increase in cash flow and a reduction in tax payment.
7. Improvement in value
Most real estate property are made up of wood, bricks and concrete, the uniqueness of this is that it can be renovated over time thereby improving the value, worth, and quality of your property
8. Tax benefit
Investing in real estate allows the government subsidizes your property with tax benefits that includes negative gearing and allowances from depreciation.
9. Free ownership
Every property you buy is individually titled in your name, giving you total control and charge over your property, it’s now your decision to make if you want to resell or rent
10. Limited chances for inflation
Investing in real estate for a long term gives you an hedge against inflation, this is because the value of this property increases over time in a rate that is in conjunction with the rate of inflation.
11. Real estate provides means of adding value to the society
Everyone needs a roof over their head and sometimes not everyone earn enough to be able to purchase a home, hence they opt to rent an apartment, investing in residential real estate provides value to those who can’t buy an apartment as your residential property is the only way they are housed safe, healthy and clean.
If you do not have a clue as to what investing in real estate entails, please consult the help of a real estate agent as they will guide you on what steps you should or should not take.
In conclusion, investing in real estate is quite easy to understand, itʹs easy to purchase, has tax benefits, generate an increase cash flow, you can build equity and wealth from investing, it appreciates over time and it also serves as a means of adding value to the society.
Thinking for investing in a life time investment, real estate is just what you need. Kindly share with friends and family