As close as 2018, stats suggested there were almost 140 million pieces of real estate in the residential sector alone. This is a huge amount of potential investment you could make at any time. Although why would you choose to focus on real estate when there are so many other options for investing your funds?
Below, we list eight of the most significant reasons why real estate investing has become a major option for many people in recent times. As you read through, you may find yourself wanting to become a major real estate investor yourself.
1. Build Wealth for Yourself
Investing in real estate and renting it out can start you on the road to building up a small fortune for yourself. As you invest further into this area, this profit might even increase faster. You can help this by charging higher rent over time or having larger numbers of properties.
This wealth is then yours to do with as you will. You could choose to spend it, save it, or put the money back into further real estate.
2. It Is a Reliable Investment
Real estate investment is one of the more stable choices of where to put your money. While the market might go up and down in the short term, it always broadly goes up in value in the long term.
Of course, specific items of real estate may face changes in how much they are worth due to changing land values. To offset this, property owners tend to ensure the areas around their properties are kept to a high standard when possible.
For this reason, you often find you receive advice to diversify your portfolio by investing in real estate. At its core, you can rely on it.
3. Properties Rarely See Inflation Issues
The effects of inflation on the value of many assets can have a real impact on how much your portfolio is worth. Real estate, though, is the exception. It is very rare you will see it suffer from major changes in inflation.
If anything, you will often see real estate values increase during periods of inflation. This means you will not lose out when you choose to put money in if the market suddenly has issues.
4. Passive Income Beats Working
While the title of this section might sound extreme, renting out your real estate can give you real freedom in how you want to work moving forward.
After investing in real estate, you can either choose to leave your property alone or become heavily invested in its development. You may want to continue working on it to increase its price, and thus the rent you get from it. Then again, you could always work with a property manager to take that job off your hands and enjoy the passive income instead.
Although, remember to follow all the laws of renting. If you are unsure what these might be, you can find more information here to set your mind at ease.
5. Invest in the Community
If you are more of a philanthropic renter, you might want to give back to the community you rent to. If you want to create a real community of people, you could empower them by supporting further development in the area of your real estate. You could even put some of your own funds into building up the local area and empowering your tenants in their daily lives.
In the most basic terms, you are providing housing to those who need it. Thus, you are a benefit to the community.
Being a community leader is not easy, although it can be very rewarding. Make sure to communicate with the community, so you know what their needs are and learn if you can make their lives better.
6. Easy to Get Started With Financing
There are many options for how to get started in the world of investment and financing. Banks and other lenders are usually happy to lend to people who choose to invest in this way. For that reason, you can often borrow a large percentage of the cost to buy real estate.
All institutions will have different interest rates and terms for lending, though. Thus, you should speak to your bank about how they specifically deal with real estate investment.
7. Tax Breaks and Benefits
While most of your real estate money every month will come from rent, there are other ways you can make money. There are tax benefits, for example, that can help you earn even more. Rental property tax deductions can give you a little extra back from the government once your tax return is calculated.
Examples of the deductions you might want to look into include:
- Advertising and marketing costs
- HOA fees
- Insurance costs
- Loan fees
- Repair fees on the property
- Mortgage payments on the property
- Property manager fees
- Utility costs
Your tax specialist will have the ability to look into this and advise you of the best course of action.
8. You Can Use One Property as a Home
Once you build up your property portfolio, you’ll start to have options for how to use those homes. Of course, the obvious choice is to rent them all out, and you can certainly start there. A few years down the line, though, you might decide you want to live somewhere else in Tennessee.
If you end up wanting to move elsewhere, then you are in luck. You do not need to go searching for a new place to buy all the time. You might have a property that is already perfect for you.
With respect to the current tenants, and giving appropriate notice, you could move into any one of your own properties. This way, you can know you can trust the state of repair of the location and you will have existing relationships with service and repair folk in the area. You can also continue upgrading the location until you one day want to move out and rent it out once more.
Invest in Real Estate Today
These points should have started to convince you of how and why real estate is the best option for you now and in the near future. As such, you might be thinking about getting involved in the business yourself. If this is the case, you are going to need more advice moving forward.
Lucky for you, our blog has plenty of other articles on the “hows” and “whys” of investment. So, keep an eye on the rest of our writing and continue going up in the world.
