If you are fortunate to have enough money to invest, or you plan on taking out financing so that you have funds to play with, you may well be considering what your options are. Many people go down the traditional route of ploughing their capital into stocks and bonds. However, since you as an investor have little to no control over what happens in the stock market, investing in this way can seem too risky. However, there are alternatives that enable you to have greater control over what happens to your money, and one that can be extremely lucrative is choosing to invest in real estate.
There are a number of distinct advantages of investing in real estate which help to make this option even more appealing. Here are some of the most important benefits to real estate investment that you need to know about.
If you choose to purchase a property that you can rent out to tenants, you will be in receipt of a regular monthly return. Exactly how much you will receive will of course depend on the location and type of property you have. If you have chosen to have a management company look after the legal side of renting out your property, you may also need to pay a monthly fee to them as well as insurance for the property itself. It is up to your tenant to insure their own contents.
While there is no guarantee that you will make money on your investment, if you choose a property in the right market where demand for homes is continuing to rise, your new rental could be worth more than you paid for it just a few months down the line. This is because and land and buildings tend to be appreciating assets. Building equity is a key advantage of property investment and your chosen home could continue to rise in value for months or even years. Knowing when to stick and when to sell is crucial so that you can make sure you unload your property before prices start to fall, enabling you to achieve the maximum amount of equity and giving you more to reinvest should you want to.
If you invest in property you will also be able to enjoy a number of tax benefits, and let’s face it, who doesn’t enjoy a little relief on their taxes? There are several perks to take advantage of. One is that rental income is not subject to self-employment tax. You. May also be able to make deductions for maintenance and repairs, insurance, legal fees, property taxes and depreciation in the event that your property loses value. If you intend on making a long-term investment you may be entitled to lower tax rates. You could even postpone paying capital gains tax on the profit from any property sales so long as you abide by the rules of a 1031 exchange and invest the proceeds from the sale into a like-kind property.
If you are financing your investments, your repayments are covered
Many people are concerned about the prospect of taking out a loan to afford their investment. After all, there is always a small element of risk involved. However, in nearly all circumstances the monthly income that you will receive from your tenant will be enough to cover your repayments and expenses. This essentially means that while you have taken out the mortgage, your tenants are paying it on your behalf!
Most people would think that there aren’t any benefits to inflation, but this isn’t the case for a real estate investor. If the cost of living rises, so too does your rental income and the overall value of your property.
These represent just a few of the advantages of investing in real estate. However, in order to get the best from your investment it is essential that you choose an experienced realtor that can help you find the perfect property in the right market. To find out more about real estate investments, please don’t hesitate to contact our friendly, dedicated team by calling our offices.