Have you always wanted to become a real estate investor? Or maybe you want to add to an already robust portfolio. Either way, our latest blog can help you learn more about why now is the time to invest in real estate!
Many people want to invest but never make that first step. Investing in real estate may seem overwhelming at first, but once you learn the ropes. it can prove to be a powerful, wealth building experience. Below, we offer 5 reasons why you shouldn’t wait any longer and why you should be investing in real estate now!
Owning real estate can provide you with a number of great benefits at tax time. When your investments are treated as a business, you’ll be able to write off the expenses you incur as a result of ownership. Property taxes, travel fees, and repair costs can all potentially be written off. You can also avoid capital gains taxes altogether with a 1031 exchange which allows you to purchase a like-kind property with the proceeds of the sale on the original investment. Doing this defers your taxes until the property is sold. You can also defer capital gains taxes by purchasing properties in an “Opportunity Zone.”
Leveraging your investment will help you maximize your profits. A great investor will learn how to properly leverage their equity in order to acquire more properties, thus building eve more wealth. Investors like to use other people’s money when getting deals done, and there is a major reason why. You could spend $50k on investment property, buying it flat out. If it appreciated at 5%, in one year, your net worth from the property will only be $52,500. However, if you took out a loan and bought a property for $200k, with the same appreciation rate would leave you with a $210k net worth from the property. You can see how over the long-term, using leverage will help you build wealth along with your portfolio. Building this strategy early in will help ensure you receive the results you are looking for.
As an investor, you’ll recognize that diversity is key to sustained growth. While many people will add stocks and real estate to their portfolio, its also a smart decision to mix up the types of real estate you’re adding. Consider not just single-family properties, but also multi-family properties, commercial properties, land, and even mobile homes! Every type of property investment comes with its own unique list of pros and cons. Don’t be afraid to venture out of your comfort zone. Taking risks can ultimately put you into a place you’ve never been before! Plus, diversifying the types of real estate you buy in will help protect you in an ever-changing market.
Who doesn’t like the idea of early retirement? Or at least having the funds available when you decide to do so. When you invest in real estate, you’ll be able to add passive income to what you’re already bringing in. Once you have enough properties under your belt, you might very well be able to say goodbye to your 9 to 5. It may not happen overnight, and there will likely be some trial and error, but investing in real estate is one of the best ways to add unlimited income for you and your family. In today’s economy, the standard 9-5 job just isn’t cutting it for people who are looking for something more out of life. By creating a varied investment portfolio, you’ll be able to generate the income you need to live the life you want.
Hedge Against Inflation
Not all investments are created equal. Some won’t retain their value with inflation. Home values and rent amount typically rise during times of inflation. Residential rentals are a great way to ensure your investment portfolio continues to grow, no matter what the economy is doing. No matter what, people are still going to need places to live and offices to work from. Even in a tough market, you will still be able to see the returns you need from your real estate investment. Real estate investing has proven to be a profitable investment year after year. Aside from a hiccup here and there, real estate consistently appreciates. The same cannot be said for stock investments.
Before making any sort of real estate investment, make sure you know what you are getting into. Research the property, the sale history, construction projects, and carefully checking for liens or cloudy title. You’ll also want to make sure there are no problems with the land itself. You should be investing in high-quality real estate that is free of liens and other negative marks on your credit.