Diversity in an investment portfolio is significant. Investing at a single place may incur a total loss in the blink of an eye. But, when you put some of your money in the stock market, real estate, other funds like bonds, and more, your probability of high earning increases. People fear real estate investment because they need a lot of money to get started. But this is not the case, and this article will prove to you why.
Why is real estate so profitable?
Investing in real estate is one of your best journeys in life. Even if you are new to this, here are top reasons for considering real estate investment:
- Leverage your investment : Not many other investments allow you to spend on assets worth much more than you can do here. For example, when you invest Rs.10 Lac in the stock market, you can buy only Rs.10 Lac worth of stock. You can put down a property’s cost in real estate investment and invest in it.
- Forcing appreciation : You can force real estate to appreciate what you cannot do in stocks and bonds. Although it sounds weird, it is possible. It is a fact that real estate appreciates naturally on an average of 3 to 5 per cent every year. You can increase the rate through renovations and repairs. Consult a real estate agent or a licensed appraiser to know about the most valuable renovation.
Real estate becomes the best investment because even tiny renovations can increase the appreciation rate. Renovations can be as primary as adding a room and a basement or minor as kitchen and bathroom modifications. All of them will significantly affect your home’s worth.
- Get tax benefits : You can take advantage of many tax write-offs as a real estate investor. You can write off the following as the business owner:
- Origination points of the loan
- The rate of interest paid on the loan
- Maintenance expenses
- Real estate expenses
- HOA dues
- Depreciation
Do not assume anything on your own, and always consult your tax advisor.
- Earn a regular cash flow : Real estate becomes the best investment because it ensures a regular cash flow. You can rent out the property to earn a fixed amount of money every month. Since you rely on monthly rent and not on appreciation, your profits increase. Although finding quality tenants can be an overwhelming task, you can discover several trustable resources. There are some threats like vacating the house before. But you can create a thorough leasing policy for avoiding such critical situations. We all know there is gain without any pain.
- Financial security : Real estate is the safest long-term investment. You feel financially secure when you own property. You can lose your investments within a few seconds while putting your savings in the stock market. But this is not the case here.
Real estate is an appreciating asset. The property rates also go up and down, but housing generally gets back if you hold onto it long enough. People use real estate investment to supplement their retirement income. You can rent out the property to get an assured monthly income or sell a house you own for a long time to make a profit. Rather than leaving your cash in a liquid state by investing in the stock market, it is safer to invest in real estate. You can also pass your real estate to your heirs.
Summing it up
The article lists several reasons why real estate becomes the best investment. If buying, selling, and renting is too stressful, you can try out other ways like being a middleman or buying an undervalued property.
