You probably have heard before that real estate is a good investment. In fact, the billionaire Andrew Carnegie once said that 90% of all millionaires accumulated wealth by acquiring properties. If you are looking to invest in real estate, here are the reasons you should take the plunge.
As a rental property owner, you can get several tax deductions. You can write off interest on your mortgage and credit card used to acquire the property, insurance, maintenance and repairs, property taxes, legal and professional fees, and more.
Investors can also make the most of the 1031 exchange for properties that you have sold for a substantial profit. Basically, you can use this strategy to defer paying taxes on the sale of an investment by using the proceeds to acquire a new property.
Value Increases Over Time
Barbara Corcoran, the founder of The Corcoran Group, said that a studio apartment she rented for “a few bucks” is what made her rich. The studio apartment, she said, doubled in value a few years later that it allowed her to upgrade to a one-bedroom apartment, which she flipped for a two-bedroom property, and so on. Today, she lives in a 10-room penthouse in Fifth Avenue.
Investing in real estate will not make you rich quick. It blesses only those who have the patience to wait for several years before they make a huge profit.
You Have a Tangible Asset
Stock is another classic way to invest and grow your money, but it has a downside: it does not offer a tangible asset value. While it gives you the freedom to choose the stock or mutual fund to invest in, you will still rely on the competence and integrity of managers and debtors to control your money.
With real estate, you have no such problem. You can be assured that there will always be value to home and land. While stock can dip to zero, your investment in real estate will be fine. Moreover, you can get insurance to protect your real estate investment in worse case scenarios.
You Get Income from Tenants
Investing in real estate is an easy and effective way to earn passive income. After you have paid off expenses like maintenance costs, what is left of the rent you receive is yours.
It Doesn’t Require a Lot of Time
Some properties will be more challenging to manage such as vacation houses, college rentals. However, properties in quiet neighborhoods that house tenants with good credit profiles would not require much of your attention. As long as you treat your tenant nicely, you likely would not face problems in the future.
If you want to spend your time traveling or pursuing a life-long dream without being tethered to landlord duties, invest in properties that are in good shape in and located in an upscale location.
Building your wealth from real estate will neither be fast nor easy. You still have to do some hard work and making yourself more informed so you can make smart decisions and be able to acquire valuable real estate.