According to statistics, about 17.6 million homeowners in the US spend more than half their income on rent. You can see the potential financial reward of investing in real estate.
By becoming the best real estate investor, you can earn a consistent flow of income. Maybe you’re planning on quitting your 9-5 job to grow your investment portfolio.
If so, you’re on the right path to attaining your financial goals sooner. You enjoy tax advantages and portfolio diversification by choosing your assets well.
Are you thinking of investing in real estate? Keep reading to know the benefits you will enjoy after becoming the best real estate investor.
Long Term Financial Security
When you invest in real estate, you will enjoy long-term financial security due to the steady flow of cash in succession. You will have a sense of security by owning a rental property depending on the property appreciation rate in value with time.
Your property’s value will increase since land and buildings appreciate. But, even with that said, note that there isn’t a guarantee the property’s value will increase indefinitely.
Ensure you do a thorough investigation of the location before buying a property.
Covered Mortgage Payments
Your tenants are also another benefit of owning income properties. Simply put, the rental income you get from your tenants will assist you in repaying your mortgage.
In essence, your tenants are the ones paying for your mortgage. So, ensure you keep all your tenants happy to avoid having vacant rental properties.
You Become Your Boss
Becoming your boss is the best part of real estate investing. You have total control over all your real estate investment strategies.
You call the shots on the type of property to invest in, tenants to have, and the rent they will pay. Also, you will choose your property manager by yourself if you don’t wish to DIY.
If you need more guidance on your real estate investment path, you can work with a real estate investing group. That way, you will know all about your market trends and how to choose high-return properties.
Tax Benefits
You will get tax exemptions from owning rental properties – the main reasons most people prefer real estate investment. For instance, your rental income will not be subject to self-employment tax.
Also, the government offers several tax breaks. The tax breaks you can qualify for are:
Depreciation Deduction
The price of purchasing and renovating a property can depreciate over its useful life. Commercial properties have a 39 years useful life while residential properties have 27.5 years.
Mortgage Interest Deduction
It’s possible to deduct the interest from your load that you use in purchasing or improving your investment property. But, due to the Tax Cuts and Job Act, the deductible amount will vary depending on the total yearly income from your rentals.
Maintenance Costs and Repair Deductions
They can deduct necessary and reasonable repairs the year they occur. For instance, you can replace damaged windows, repaint, and fix leaks.
You will enjoy more tax breaks once you become a landlord. Real estate investment is something you want to consider around tax season.
You Can Leverage Funds
When buying a real estate property, you might not be able to afford the total amount. The housing unit you plan on renting might cost you over $200,000.
Here is where leverage comes in – you use other people’s funds to buy properties. In such a case, you will borrow a loan, mortgage, or credit from a financial institution and pay it back with time.
That will enable you to diversify your real estate portfolio without spending the total amount you might have to pay on your own.
Real Estate Appreciation
Before getting in deep on real estate investment, you should know that it will be a long-term investment plan. But, another benefit of real estate investment is the capital assets appreciation over time.
The land is always appreciated and worth much more in 30 years. That’s why investors are always in for the long term.
You Have a Hedge Against Inflation
Real estate reacts proportionately to inflation, meaning that your property value and rent also go up as it goes up. Real estate will be a perfect hedge against inflation.
But, rental properties released annually are more effective. You can adjust the monthly rent upwards in periods of inflation. Hence, real estate is the perfect way to hedge your investment portfolio against inflation.
Benefit the Community
More often than not, investors focus more on cash flow, ROI, and other financial indicators. But, one significant benefit intelligent real estate investing has is its impact on your community.
By being the best real estate investor, you will improve your community by improving the type of available housing. You will also maintain the properties and increase the local tax revenue.
That way, you will directly impact people’s lives in your local area. Investing in fixer-uppers will remove eyesores and improve residents’ self-esteem.
A Chance to Build Capital
The main goal of real estate investment is increasing your cash or building capital. You will get to boost your capital after selling a higher-value property.
But, the main point is to invest in a property that has the potential to increase in value over time.
Become the Best Real Estate Investor
Even though there are many benefits of investing in real estate, some drawbacks exist. One main drawback is the lack of liquidity – a property transaction can take too long to close.
But, that’s one risk you’re willing to take and enhance your risk-and-return profile on your investment portfolio. The housing market is very lucrative, potentially earning consistent and smart money.
Keep an eye on our website to learn more on how to be the best real estate investor.
