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Real estate is a highly lucrative investment, but most investors find it difficult to get started. Here are 20 reasons why you should consider investing in real estate today:
Real estate is a great investment, but it can be difficult to know where to start. Here are five benefits of investing in real estate. Read more in detail here: 5 benefits of investing in real estate.
Real estate is one of the most popular and successful investments with a lot of potential for success when done properly. Real estate investment has several benefits, including a consistent income stream that may lead to financial independence. We chatted with industry professionals who discussed the different advantages of real estate investment.
The following are the top 20 professionals’ reasons for investing in real estate:
1. You have the ability to build future equity.
Coldwell Banker Residential Real Estate’s April Kozlowski Palomino is a real estate agent.
The ability to generate equity is one of the benefits of real estate investment. Equity is a financial asset that is included in your net worth. You accumulate equity as you pay down your mortgage. As your equity grows, you’ll be able to use it to buy other rental properties and improve your income flow.
2. You Can Earn Money While You Sleep
Mill Creek Home Buyers’ President, Brady Hanna
You may produce practically tax-free passive income by investing in real estate. Even while you’re asleep, your rental properties are working for you. You have the opportunity to do what you like instead of spending all of your time at work if you acquire many rental homes that create enough revenue to support your expenditures.
3. It may help you save money for retirement.
Nancy Wallace-Laabs, KBN Homes Co-Founder
When done correctly, real estate investment is a reliable method to build wealth over time. Real estate investment may generate income flow for retirement, which is one of the numerous advantages. This implies that rental revenue from your properties may assist augment your retirement income.
4. Investing in real estate has a positive impact on the community.
IWillBuyHouse Co-Founder Alexander Romanov
While most investors concentrate on the ROI, CAP rate, cash flow, and other financial metrics, the influence on the community is a substantial and unquantifiable advantage of real estate investment. By enhancing accessible housing, preserving assets, and boosting municipal tax revenues, responsible real estate investors benefit communities. This has a direct influence on the communities and improves the lives of the residents. By purchasing and rehabilitating a decaying property, you not only eliminate an eyesore, but you also boost the self-esteem of the people who live nearby. The mom-and-pop real estate investors are a bright light in a world where investors are linked with unrestrained greed.
5. You Have the Freedom to Exercising Your Entrepreneurial Spirit
Jason Fox is the owner and founder of Jason Fox Real Estate Marketing.
There are several methods to invest in real estate and start a business. You may purchase a property, renovate it, and resell it for a profit. Purchase a property with the intention of holding it and profiting from the appreciation. Perhaps you decide to become a landlord and begin buying rental properties, multi-family houses, or even flats. Perhaps you should pursue land development. You are the one in charge.
6. You Can Benefit from the Diversification Benefits of Owning a Physical Asset in Your Portfolio
HomeDax Real Estate’s Principal Broker, Nicholas Oliver
Investing in real estate protects against inflation while also providing the portfolio diversification advantages of owning a tangible asset. Regardless of financial market situations, real estate is a physical asset that can be monetized by renting or dwelling in the property. When compared to conventional stocks or bonds, this makes it significantly more resistant to asset market volatility. Real estate is included in the category of alternative investments, which also includes art, collectibles, and physical gold. Real estate’s tangibility also gives property owners a feeling of security amid downturn markets or short-term stock sell-offs.
7. Investing in real estate is a kind of inflation protection.
Mashvisor’s Content Marketing Director, Daniela Andreevska
While most people are concerned about inflation, real estate investors are not. Investing in real estate is a great way to protect against inflation. The rental income you get from your house and the value of your investment both increase when the price level rises. This implies that real estate investors are safe from both the short-term and long-term consequences of inflation. Although it may not be the first advantage that comes to mind when thinking of real estate investment, it is important to consider since a rise in the cost of living is linked to an increase in cash flow for real estate investors. In recent decades, the average annual real estate appreciation rate in the United States has been roughly 6%, while inflation has seldom exceeded 4%.
Depreciation might help you save money on taxes.
CreditRevo’s CEO, Marshall Armond
Investing in real estate may be done for a variety of reasons. When leased, it may help produce income and is a proven strategy to develop wealth over time. It may also help you enhance your profits by providing tax advantages via depreciation.
9. It Could Be a Different Way to Save for a College Education
The Van Steyn Partners, RE/MAX, Marc A. Van Steyn, Team Leader
Real estate investment might be a good way to put money aside for education. It is suggested that young families acquire one property for each kid who is expected to attend college. A 15-year mortgage may be used to finance the house, allowing it to be paid off before the kid turns 18. It enables families to save actively via rental payments. They may either sell the property or keep it as a source of cash flow after it is paid off.
Property ownership generates wealth.
Sarah Richardson, Broker & Principal, Tru Realty
At the absolute least, everyone should possess a home or a piece of land. One of the numerous advantages of investing in real estate is the ability to grow wealth via appreciation, equity accumulation, and inflation hedging. It may also create cash flow via rental properties that generate passive income. These are some of the reasons why real estate should be a big part of your investing strategy.
11. Real estate may be a long-term investment that pays well.
iintoo’s Managing Director, Jeff Holzmann
Real estate investments, unlike stock market investments, do not change dramatically on a daily basis. It is a secure investment that pays you a regular income. You just collect your continued income (also known as Cash on Cash Return) on a regular basis in the hopes of selling when the price rises significantly and the market is at its peak. Of course, the market isn’t the same in every place, thus buying and selling chances might differ significantly throughout the nation. Because real estate offers a consistent income flow for the owner, many people equate it to bond investment. Bonds, on the other hand, are more susceptible to market swings. Because of capital contributions or political instability, real estate assets will not quickly alter in price. As a result, real estate is a secure and reliable investment. Real estate investments can provide substantial tax advantages to the owners as well.
12. Real Estate Is Easy to Finance & Provides Leverage
Bruce Ailion, Real Estate Agent & Attorney, The Ailion Team, RE/MAX Town & Country
Real estate is a simple asset to finance as an asset investment vehicle. You may borrow 50% to 90% of the purchase cost at competitive rates, which are often lower than the expected yearly investment return. Positive leverage refers to the capacity to increase the investment return by using finance. Stocks, bonds, commodities, and art do not lend themselves to being used as collateral for loans with the same ease.
13. Real estate increases in value over time.
Wilson McDowell, Managing Director & Principal, Cite Partners
Many individuals and institutional investors have found industrial real estate to be a particularly appealing investment. The amount of money seeking industrial real estate ownership has risen dramatically recently. There are two reasons why values are rising. The first is that, due to increased demand for these facilities and rising building costs, rental prices are continue to climb. Second, as the number of investors bidding on industrial real estate assets grows, the cap rate, or yield, continues to compress, enhancing the value of the property.
14. It has the potential to outperform traditional investing.
NextHome’s Chief Strategy Officer, Keith Robinson
Because you don’t have to put the whole amount of money into real estate, it can outperform traditional investing. You’d have to put the whole $200,000 into the stock market if you wanted to invest it. If you wanted to invest $200,000 in a duplex, you could do it with as little as $40,000 in cash. The bank will put up 80% of the money for the investment, but you will retain 100% of the earnings. Because you only put up 20% of the case for the investment, your return on the real estate investment would be much larger if both appreciated at the same pace.
15. You may assist in the creation of a home for others.
John Graff, CEO & Broker, Ashby & Graff Real Estate
The satisfaction of helping people find a home is an often neglected advantage of real estate investment, particularly residential real estate. Everyone needs a place to live, but not everyone has the financial means to buy a house, leaving them with little choice but to rent. We often hear about landlords shirking their obligations and making some tenants’ living circumstances dreadful. By purchasing residential real estate, you are not only assisting with the housing of a family, but you are also ensuring that the family is housed in a safe, healthy, clean, and equitable manner.
You Can Contribute to the Local Economy in 16 Ways
Raqiba Lela Bourne, Halstead – East Side Real Estate Professional
One of the benefits of real estate investment is the ability to contribute to the local economy. As a real estate investor, you’ll be able to use local licensed contractors, buy construction supplies, and generally boost the local economy surrounding the construction site.
17. You may change your primary residence whenever you choose.
RJ Winberg, Real Estate Agent & Owner, OC Real Estate Guy
If you own several homes, you may be able to switch your principal residence from one to the other later in life if you so want. When raising a family, many individuals prefer a two-story home, but in their golden years, they prefer a one-story home since it is more manageable.
18. Investing in Real Estate Assists in Risk Mitigation
Paragon Real Estate Group’s Shawn Kunkler is a real estate agent.
One of the most significant advantages of using real estate in one’s investing portfolio is the reduction of risk. Sure, having a consistent monthly income is beneficial, but having protection against higher-risk assets like stocks is also crucial. By not hyper-focusing on one specific investment profile, having the correct mix of real estate in one’s portfolio may provide just enough diversity to help offset vulnerability.
19. You Can Benefit from a 1031 Exchange
Marco Santarelli, Founder & President, Norada Real Estate Investments
When you reinvest the profits in another property, you may defer paying taxes on the sale of your property under Section 1031 of the Internal Revenue Code. Because the IRS believes you to be trading one property for another, this is the case. The new property, on the other hand, should be of the same character as the old one, with a value that is equal to or higher than the previous one. You must also discover the new property and incorporate it in the official documentation within 45 days of selling the old one, and you must finalize the sale within 180 days. To be qualified for the 1031 Exchange, you’ll also need an intermediary to manage the transactions.
20. Real Estate Investing Allows You to Be More Flexible
Allison Bethel, Real Estate Investing Analyst & Writer, Fit Small Business
Investing in real estate allows you to be more flexible. You may invest in real estate, establish a portfolio over time, and rely on rental income or earnings from fix-and-flips as your primary source of income. You may work for yourself and manage your properties and tasks on your time. This gives you the freedom to choose your own timetable. Real estate investing has no wage ceiling, therefore your income potential is almost endless.
Conclusion
Real estate investment has several advantages and is an excellent source of passive income. Because there is such a high demand for houses, their value normally rises, enhancing your earning potential. Aside from financial gains, there are several additional advantages to investing in real estate. Check out the benefits of real estate investment listed above to see why it should be a part of your portfolio.
The “disadvantages of real estate investment” is a blog post about the top 20 benefits of investing in real estate from the pros. The article talks about why it’s important to invest in real estate, and how you can benefit from doing so.
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