Advantages of Real Estate Investment

by Qarah Ict Qarah ICT

Real estate is one of the best mediums for building wealth. However, like any investment, real estate involves considerable time, risk, effort and money. It takes time to study how to find properties, fix and flip them, manage tenants and carry out other associated tasks. Despite the late-night infomercials claim, real estate investing isn’t for everyone. Should you consider jumping into the market? Here are some advantages of real estate investing before your next move.

Advantages of investing in real estate

There are many purposes for investing in real estate. For starters, it’s a commodity you probably already know and understand, at least to an extent. Not to mention, historically, real estate has increased in value.

Real estate appreciates in value

Generally, real estate appreciates over time. In other words, your property will eventually rebound even if you invest $500,000 and a crash cuts that value in half. Many factors add to how much your investment will appreciate, including location, supply and demand, the economy and renovations, to name a few.

Increase your net worth

Net worth is the complete sum of what you have minus what you owe as you pay down the mortgage on investment property, your equity in the property increases. That moves the balance of the equation because you own more and owe less. As a result, your net worth increases.

It’s tangible

Real estate is a tangible thing that will always have a monetary value. That’s not always the same with other investments. For example, if you invest $500 in the stock market and the market fails, your stock could be valueless, nothing but a piece of paper, the following day.

On the other hand, regardless of the housing market, you still possess the land and any structures. And that land has value. Your $500,000 investment may drop in value from $500,000 to $400,000 if the housing market crashes, but it will always be worth something.

It creates a passive income source

You are left with several choices when it comes to investing in real estate. You can purchase a priceless property and turn it for a profit, invest in a real estate investment trust or lease the property out to tenants. By renting out a property, you can create a steady income stream. Every month the property is occupied, your tenants will send you a rent payment, and what is remaining after paying the mortgage and other costs is yours.

It comes with tax benefits

If you possess your own home, you know you can minus your mortgage interest and usually state and local property taxes. As a real estate investor, you can minus insurance, maintenance and operating expenses. When you sell the property, you can turn it over into another property and defer your capital gains.

Investing in real estate can create wealth, but you don’t have to buy rental properties to grow your net worth. Simply acquiring your own home can do that. Are you planning to purchase your first home soon? Dorrmat is a reputable and reliable real estate agent to hire around Arizona.