Real estate is one of the most profitable investments with a lot of opportunity to create wealth. It offers many advantages that entrepreneurs and investors can enjoy in building a stable income flow that may lead to financial freedom. I have work as real estate agent for some years; I see and understand and see how real estate in one of the best and secured investment. I remember selling a property to an investor for $ 85,000.00he he has spent 40,000.00 to fix it up, and has sold the property six months later for $205,000.00. What other investment can generate this type of profit? Let me tell you this. Anyone with motivation and discipline can do it.
Allow me to provide you some of the advantages of investing in real estate:
1. Invest in real estate allow generating wealth. Anyone should own some investment property when we imagine the verity of benefit provides by this type of investment. One of the many benefits of investing in real estate is being able to generate wealth through appreciation, building equity, and evading against inflation. It can also provide cash flow with passive income from rental properties. These are the reasons why real estate should be a key component of anyone portfolio.
2. Real estate investment allows to Build Equity for the Future. Another advantage of investing in real estate is being able to build equity progressively. Equity is an asset that is part of our net worth. As individual continue paying mortgage on a piece of property depending of a buyers or sellers’ market the equity might be greater than the mortgage payment. As the equity is building now we have leverage to acquire additional rental properties or flipping properties to continue increasing the cash flow from single properties to building.
3. Real Estate Investing Is a Hedgerow against Inflation. Investing in properties is an excellent hedge against inflation, and most other investments don’t have this opportunity. When the property is appreciated, the rental income will be increased. This means that real estate investors are protected against both the immediate and the long-term effects of inflation. Although this might not be the first benefit of real estate investing that comes to mind, you should take it into consideration because for real estate investors, an increase in the cost of living is associated with a growth in their cash flow. The average annual real estate appreciation rate nationwide has been nearly 6 percent in recent decades, while the inflation rate rarely reaches 4 percent.
4. It consents to generate Passive Income. By investing in real estate, passive income will be generated even when you are sleeping in your bed. Your rental properties will work for you instead of working a lot of hours in getting pay check to pay check and cannot even pay all your bills. You will have less job stress and more free time to spend with your family and enjoy a better life. By buying several rental properties that generate enough income to cover your expenses, you have the freedom to do what you enjoy doing. I remember that I used to work 16 hours from 6:00 a.m. through 6:00p.m. and could not pay all my bills. Today flipping one property is enough to pay all my bills.
5. Investing in Real Estate also Benefits the Community. It is crucial to create an impact to your community. Money is not everything, and it is imperative to help others, to look for some problems to solve and the money will come next.
While most investors focus on the ROI (return on investment), the CAP rate, the cash flow, and other financial indicators, an amazing and unquantified benefit of real estate investing is the impact on the community. Responsible real estate investors improve the communities by improving available housing, maintaining properties, and increasing the local tax revenues. This directly impacts the communities and improves the lives of people living there. By buying and repairing a tumble-down home, one not only removes an eyesore but also improves the self-esteem of the residents living around the home
6. Real Estate Is Easy to Finance & Provides Leverage. Real estate is one of the easiest assets to be financed. Depending of the financial situation, real estate properties can be financed 100% with other people money, and without a dime own money or investors’ money. When we say financing properties that mean buying the properties and fix them up. The ability to magnify the investment return with financing is called positive leverage. Stocks, bonds, commodities, and art cannot offer the same ease when being used as collateral for financing.
7. We Can Take Advantage of the 1031 Exchange. Section 1031 of the Internal Revenue Code allows you to defer paying taxes on the sale of your property when the profit realizes is reinvested the in another property. IRS considers that the old is exchanged another new property. In this case, the new property should be the same nature as the old one, with equal or greater value. In addition, the new property should be bought within a minimum time of selling the selling the old one.
Real estate investment more than other investments has many benefits and is a great source of passive income. Since there is a large demand for properties, the value of real estate usually appreciates, increasing your potential for profit. Apart from financial advantages, there are other significant benefits of investing in real estate as we have shown above; if you chose to do so real estate investment could make a great part of your portfolio.