Why real estate is the best investment you can make
When it comes to fruitful investments, having a diverse portfolio is imperative. Investing most of your hard-earned money in just stocks or bonds or EFTs can potentially be a huge risk. This applies globally. The secret is to divide and invest your finances wherein some funds are invested in the stock market, some in EFTs or bonds, and some funds in real estate. Real estate is always growing. That’s why it’s a fantastic investment option. Having a fairly diversified portfolio maximizes your chances of securing higher earnings and minimizes the effects of losses incurred.
Top reasons for investing in real estate
One of the first myths that need to be busted is that real-estate investments require a lot of funding. Irrespective of where you live in this world, real estate investment is a lucrative option. It isn’t risky. Here are some of the stand-out reasons why investing in a home always pays off:
- Investing in real estate enables you to leverage your investment
When it comes to portfolio diversification, real estate is probably one of the only investment avenues that allow the investor to invest in assets that are worth a lot more than you need to invest. For instance, when it comes to purchasing property, having funds that can be used to put down only a small fraction of the property’s cost is enough to invest in that property. This means that if you just invest in 5-15% of the home’s value, you own it. Thus, over the years, while you mortgage, you end up holding more of your investment. This means that your return rate increases through mortgage payments as well as through the natural appreciation of the value of that property.
- Unparalleled tax benefits
Finding the best home to invest in and investing in that property also comes with a lot of tax benefits. You can benefit from several tax write-offs. When you invest in real estate and rent that home, you’re the landlord. It’s a business. You’re the business owner. As a business owner, you have the power to write off the following costs:
- The mortgage interest that you pay on the loan.
- Maintenance expenses
- Real estate taxes
- Homeowner’s insurance
- HOA dues
- The origination points that are paid on the loan
- Several investment avenues for investing in real-estate
The wonderful thing about venturing into real-estate investment is that owning property and renting the same isn’t the only option that you have for experiencing the financial benefits of real estate investment. Here are the options:
- Buying, fixing, and flipping undervalued property.
- Investing in Real Estate Investment Trusts
- House hacking is another great option where you purchase a 1–4-unit property. Live in one unit. The other 3 units can be rented out. Therefore, the rental cash flow can be used to cover the mortgage.
- You can consider becoming a wholesaler worker. You can work as a middle man between the buyers’ network and motivated sellers.
Finding the best location to buy a home and thus investing in that home comes with other significant advantages. Real estate can be passed down to your heirs. The equity can be used to increase and diversify your real estate portfolio. Financial security is another significant advantage of real-estate investment.
What do you need to keep in mind when investing in real estate?
The following aspects are very important while investing in real estate:
- Check for the tax history, crime rate, and school ratings of the area.
- The area must also be attractive for potential renters with fast-appreciating homes.
- Compare the average sales prices of properties recently sold in the area with that of the historical sales prices of homes in that area.
The real estate investment was rated as the best long-term investment in a 2016 Gallup Poll. Investing in real estate can be highly rewarding for your financial security and freedom.