WHY INVEST IN REAL ESTATE?
We all know that fortunes have been made in real estate. People invest in real estate because of the enormous advantages of owning real estate. They can make money when they buy, they can make money when they own, they can make money when they sell. There is potential to win, win, win.
This is a great time to invest. Mortgage rates are at a 40-year low, and homes in many areas are inexpensive. Demands for rentals has risen in more than 500 cities, according to recent Census data.
Here are some reasons why investors invest in real estate:
1. Rental Property Income
Cash flow is income generated from a rental property after all expenses are paid. In the rental market demands are up and rental costs are rising. That is in part due to foreclosures that have turned over 4 million former homeowners into renters. Some reports indicate that rents nationwide went up 11.6%, A great time to invest is while others are sitting on the sidelines.
2 . Tax Benefits of owning real estate
Wise investors invest in real estate is for the tax benefits. Tax benefits are granted by the government, this allows you to keep more of your revenue, and minimizes your taxable income. Tax benefits in real estate can consist of depreciation, business expense deductions, tax deferred exchanges, and investing tax free with your Self Directed IRA.
3. The Value of Appreciation
Throughout history, real estate has shown to be a consistent source profit through the increase in investment property value over time. While no one can predict that this trend will always stay true, real estate goes up or down in value and varies significantly by area.
4. Improving Investment Property Increases Value
While your investment provides rental income cash flow, your property can also be improved in order to gain even more profit if you should choose to liquidate this investment.
Flipping a property is purchasing a property, and then selling it for profit. This process is usually carried out in a very short amount of time, making the flipper a certain amount of profit, in the shortest time period possible.
Cosmetic improvements and functionality improvements of an investment property can significantly increase value. As trends and styles change, making the property interesting to renters or potential buyer will, at the very least, help you to retain value.
5. Inflation Is Opportunity for the Investor
Your fixed mortgage remains constant over time, the inflation that drives up home construction costs will also drive up rents. Population growth will create housing demand, again driving up rent prices if supply cannot keep up with demand.
6. Pay Off Your Mortgage
As you pay down your mortgage, you gain equity that can be used for other purposes or investments. While equity is frequently accessed by selling the property, a real estate investor can also take out equity loans if the terms are right and leverage those funds.
7. You Can Find The Best Deals
Finally, what are is the first ambition of the real estate investor? To buy property below market value. There are opportunities to buy below market.
Wise investors may sometimes be able to locate a below market value-priced property. This is an immediate way to increase your net worth and the value of your investment portfolio.And that is why it is a good idea to consult with a Real Estate professional.