If you are a new investor or have yet to begin, a part of you may be wondering, “Why should I invest in real estate? What are the benefits? How can it help me make money?”
While there are countless reasons why real estate makes a great investment, there are a few key benefits you should understand:
Investing in real estate is one of the best ways to generate a consistent monthly income. Whether you want to make enough to supplement all your bills, just want to make some additional cash, or want a way to live in retirement, income from a rental is an ideal option.
Tax Deductible Expenses
Real estate investment properties offer several tax benefits. Nearly all expenses you pay for the property are deductible, from insurance costs to property manager salaries to household products.
The appreciation of a property is one of the main reasons people invest in real estate. While the market has had its ups and downs, the majority of properties are increasing in value over time, particularly in up-and-coming and in demand neighborhoods. Remember, location is everything. If you found a property by the beach or in the city, with some renovations, you could easily flip it for a profit within a few years. Real estate is one of the few investments that provides such a large return without significant risk.
Also known as OPM (or, “other people’s money), leverage is when you use a small amount of your personal money to own a more expensive asset, like a home. By buying a home, you put down a small down payment to own something you couldn’t pay for outright. Leverage isn’t that risky in real estate, while it is in other investments, such as stocks.