Have some money saved up and ready to invest? For most investors, there’s no better option than to start purchasing real estate. Read on to find out about the benefits of real estate investment and development to find out why.
Steady Passive Income
Purchasing a rental property is a great way to generate a steady stream of passive income. If investors choose properties wisely and maintain them well, they can expect to make more than enough money from tenants rent to maintain their properties, cover expenses like insurance and taxes, and make some extra money on the side.
Once properties start generating positive cash flow, investors can expand their holdings and diversify their portfolios by purchasing other rental properties. Many savvy investors even wind up quitting their 9 to 5 jobs to manage their investments full time. Those who want to go the next step and get into real estate development can head to nria.net to find help.
Long-Term Financial Security
Rental property owners don’t just generate money through monthly rent. As long as they are well-maintained, most rental properties will also appreciate in value over time. That means, when it comes time for property owners to sell, they’ll get a good return on their investments on top of the ongoing monthly income earned from rent.
Increased Equity and Financial Leverage
Residential and commercial rental properties can also serve as an important form of financial leverage. Most buyers take out mortgages to pay off their properties, but the payments should be covered by rental income. That means property owners can simultaneously build equity and wealth without incurring significant financial risks. Leveraging money by taking out mortgages also allows investors to free up more of their funds so they can initiate other real estate deals, explore other investment options, or meet other financial goals unrelated to investing.
A Safer Investment Strategy
Investing in real estate is much less risky than putting money into conventional stocks. Companies come and go, but people will always need places to live, and businesses will always need offices and storefronts. There are never any guarantees when it comes to a return on investment, but when it comes to long-term financial planning, real estate is one of the safest routes to go.
Hedge against Inflation
Real estate values react proportionally to inflation. That’s good news for investors who want to plan for the future. Some level of inflation, defined as the sustained increase in the price of goods or services, is inevitable, so it’s wise for investors with long-term financial goals to have a plan in place for mitigating it.
Those who are new to real estate investing may not realize it, but landlords get tax breaks for owning rental properties. Rental income isn’t subject to self-employment tax, and tax deductions are available for insurance, maintenance, repairs, legal fees, property depreciation, and more. Plus, real estate investors get lower tax rates on long-term investments.
The Bottom Line
Real estate investing isn’t just for the extremely wealthy. Anyone with substantial money to invest can diversify his or her portfolio by purchasing rental properties or getting into real estate development. While there’s always some risk involved in making new investments, the financial risks associated with purchasing real estate are minimal.