Suppose that you have a significant amount of cash at hand, but you do not know where to invest in. You have a lot of options, but none of them seems right. Then you come across real estate and decide that this is the best way to invest, which will double or triple the current value in a few years. House, apartments, plots, etc. are all real estate. Property investment for the last several decades has been a great source of income, and for some, it has become a multi-million dollar business. The popularity of investing in Real estate is growing fast as compared to other investment options like buying shares, buying gold, etc.
Information is very crucial when it comes to investing in real estate, and you should know your stuff. So here we are going to discuss the ten major benefits of Real estate.
Cash Flow
The major advantage of investing your hard-earned money in real estate is steady income or cash flow. Cash flow is the money that you have when all of your expenses like mortgage, maintenance, tax and insurance have been deducted from the rent.
Suppose that the rent your tenant pays is $1500 dollars and after deducting expenses which are around $500 to $700. You are left with almost half of the rent, and you can use that any way you like. You could travel, expand your business or buy more real estate.
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Tax Benefits
By investing in real estate, you can enjoy tax benefits. You can save hundreds of thousands of dollars by tax breaks which the government provides. You can avoid paying tax on sales if you are investing in real estate. There are expenses involved in property investment, and because of them, you can avoid taxation. You could be making money, but because of the expenses involved and depreciation, you avoid paying taxes.
Appreciation
Appreciation means the value of the property increases, and the more time has passed. Investors buy a property and wait for a few years so that they can make significant profits from their investments. The value of the property will be considerably high 30 or 40 years from now. So you have to be patient and wait if you are a newbie. The major players or the ones who have made a name for themselves are in the game for the long haul.
Leverage
Let us explain leverage with an example. Suppose you want to buy a $400,000 house. You can purchase this house by giving 20% from your own money as a deposit and borrowing the rest from the lender or bank. So you paid $80,000. Now the value of the property appreciates, and at the end of the year, it has gained 8% in value. So if you sell the house now, it will be sold for $432,000. A profit of $32,000. If you have bought a house for the $80,000 you had, you would only have a profit of $6,400. This is called leverage. You borrow money to make greater profits.
Helping the Economy
By investing in real estate, you are helping the economy. When buying a property in an area, you can help the local community by buying building materials, employing the local force and providing them with the opportunity to earn their bread and butter. Think of the things that are needed in building a house, cement, wood, pipes, paint, and so much more. So you will be helping the local people involved in these sectors.
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Improving the living Standards
You can help improve the living standard of the people in the community by making changes in the house you bought. Changes that give a more modern and vibrant look to the house. When other people see what you have done, they will also want their houses to be modern, latest and stylish. So keep exploring and learning what the latest trend and practices in the world of house making.
Freedom
Once you have decided you want to be in this business for good, you do not have work 9 to 5. You will have the freedom to do work at any time to like. You can decide which property you want to buy, who your tenants are going to be or what your rent will be. You are your CEO. You have the decision making power and authority, and control all the successes and failures.
Lifestyle
When you know that each month a certain amount of cash is coming in every month from your investments in real estate, you enjoy a relaxed and more fun lifestyle. You can make that long-awaited trip that you have been longing for or buy a better car. You will be in a position to enjoy and afford most things that other people do not. If you have multiple houses, you do not have to stay at a single place for the rest of your life. You can move to any of the houses you feel like.Your retirement lifestyle will also be better since you do not have to stress out about the financial loss.
Inflation
Most people are afraid of inflation, but if you are a real estate investor that is a good thing for you. The reason is that inflation increases the value of the property. If you have rented the property, your rent also increases. Inflation does not bother real estate investors as they are protected by it,in the long run as well as the immediate, with the increase of the value of their assets. If you are looking to invest, you should keep this in mind. The inflation in 2019 was 1.9%, and in 2018 it was 1.26%.
Providing homes
Everyone needs a roof over their head and by building and buying houses, you are helping those looking for shelter. Not allhave the means to buy a new house so their best option is to rent and that is where you come into play. By buying and renting a house, you are helping parents and their children so that they have a nice, clean and a healthy place to live in.
Conclusion
Real estate investment has a lot of benefits which cannot be overlooked from personal to helping other people. It is a great source of income. It can give you tax breaks so that you can expand your business. You can get leverage to gain profits. Your lifestyle will get better and all the while you will be helping out economy, the local people and families. Inflation will have to help you in the business, and you will have the freedom to run your business the way you like. If you have the means and want to invest, then real estate is the most reasonable and smart choice as I have listed the benefits above.
