The Benefits of Investing in Real Estate

Are you considering investing in real estate? If not, you definitely should. Real estate investments are sometimes passed by for a number of reasons. For example, investing in real estate is more complicated than investing in stocks or money market accounts. It also requires a much larger investment, and a lot of work that doesn’t come with other investment types. On the other hand, real estate investments are often very lucrative. In fact, there are a number of different things that make real estate a wise choice for many investors. Here are some of the benefits of investing in real estate.

Relatively little work

Let’s clarify. In the beginning, real estate investing is a lot of work. In fact, as long as you continue building your portfolio, you’ll be working as hard as a new business owner. Some people even quit their jobs and work on real estate investments full-time. In beginning there is so much to do, from finding financing, to discovering the perfect property, to picking the right management company. But the reward comes in after all of that is completed. Once everything is set up, you’ll still have to move a little money around every so often, or make a couple of important decisions, but otherwise, all you have to do is wait for your check to come in the mail each month.

Tax benefits

Owning real estate actually comes with a number of tax benefits. For example, in most cases, you can count the interest you pay on a mortgage as a deduction. You can also count depreciation, depending on the type of building. In some cases, you can even use the proceeds from the sale of a property to purchase another property without having to pay taxes on the income. Whenever you file your taxes at the end of any year during which you owned real estate, make sure you talk to your accountant about what you may be able to save.

Multiple streams of income

One of the best things about owning real estate as an investment is that it can produce multiple streams of income. Of course, any property that you own will appreciate in value over time. With wisdom and timing, you’ll be able to sell a house for more than you bought it for. You can earn even more by finding a home that is in need of repairs, buying it, and completing the repairs. In the right situation, this will increase the value of the property more than the repairs cost. You can also rent out the property. Rent checks can help you pay off the mortgage, or go straight into your pocket.

Predictable income

When you own real estate, it’s nice to know about what your income will be, at least in the near future. Of course, you always have to be prepared for negative events. A tenant may leave unexpectedly, or you may need to do a major repair, but for the most part, you’ll always have a pretty good idea as to what your income and expenses will be in any given month.

Purchasing flexibility

When you buy stock, you can buy as much as you want, but there’s no negotiation on the price. You either pay what they ask, or you don’t buy the stock. This is true for many types of investments, but real estate is the exception. If you don’t think that a property is worth what it’s being sold for, you have the right to ask for a different price. Of course, the seller can always disagree, but many real estate properties sell for less than their asking price.

Interested in learning more about the benefits of investing in real estate? Contact us. We are here to help. 

Center Street communications are not intended to provide business, legal, tax, investment or insurance advice.  No Center Street communication should be construed as a recommendation for any business or investment strategy by Center Street or any third party.  You are solely responsible for determining whether any investment, investment strategy, business strategy or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.