4 REAL Benefits of Real Estate Investment
Look around you. What do you see?
About 63 percent of Americans own real estate. Are you looking to join this group of people? Owning real estate, though, is different from real estate investing.
Real estate investing means using various types of real estate assets, such as residential and commercial properties, land, and REITs, to generate an income or wealth. If you’re on the fence about investing in real estate, you’ve come to the right place.
Read on to know the benefits of real estate investing.
Steady Cash Flow
In an uncertain world, having a steady cash flow is a great achievement.
Investing in real estate is an ideal way to build yourself a steady income. What you need to do is become a landlord.
When you build or buy rental properties, be it for residential or commercial use, your tenants will pay rent on a monthly basis or as agreed in the lease agreement. As long as your properties are occupied, you’re certain of banking some money frequently.
The income you get from your real estate investments can help you get wealthy. But this is not the only way real estate will help you build wealth.
When you buy real estate property, its value could keep rising. Let’s say you bought a house worth $500,000 last year. In the next ten years, its value could rise to $600,000. This increase will show up in the calculation of your net worth, but you can also sell the property to realize the gains.
While you will pay capital gains tax on the profit, keep in mind that real estate investing comes with several tax advantages.
Diversify Your Portfolio
Perhaps you’re hesitant to invest in real estate because you already have investments in stocks and other markets. That’s commendable, but why would you want to keep all your eggs in one or two baskets? If all your wealth is in the stock market, for example, a stock market crash can wipe out most of it!
A savvy investor knows the importance of portfolio diversification. Real estate is a good asset class to add to your portfolio. What’s more, real estate usually performs well against inflation.
It’s Isn’t All About the Buildings
When you think about investing in real estate, the first thing that comes to mind is buildings! To be fair, that’s what happens for everybody – apart from seasoned real estate investors who know REITs.
If you don’t want to do the dirty work of developing apartment complexes and skyscrapers, you can put your money in real estate investment trusts. These are large companies that have income-generating real estate property. So, you buy shares in these companies and earn dividend income.
Enjoy the Benefits of Real Estate Investments
Investing in real estate is capital intensive, which discourages many people from getting started. However, you need to start big. Even using a spare room in your home as a vacation rental counts as one of the investment options!
Now that you know the benefits of real estate investing, what are you waiting for?
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