Real estate investment has proven itself again and again as a way to build wealth. To learn more about the benefits of real estate investing, keep reading.
Benefit 1 – Good Returns
Typically in an average market, most real estate investors will see an annual return of between 8 to 10 percent. This steady incline in real estate values is often a lot better than what you’ll earn with a money market or standard savings program.
Benefit 2 – Fairly Easy
Almost anyone can get into the real estate market at some price point, even if you only have modest means. While you may not be able to buy a penthouse in Manhattan, a small property in a rural town could fit the bill.
Benefit 3 – It Provides Leverage
Leverage is being able to use credit to finance the purchase or development of a real estate investment. Because real estate can be used as collateral, you’re able to invest in something without putting up all the cash yourself.
Benefit 4 – It Appreciates Over the Long Term
Real estate will appreciate over the long term, and do so consistently. Unlike a tech stock or a hot mutual fund, a real estate investment will continue to appreciate.
Benefit 5 – Stability
Unlike a sometimes risky stock investment that may yield high returns initially but drop like a rock later, real estate is often a sound and stable investment. Overall, real estate is slow to fall and slow to rise, meaning with patience – you will make money.
Benefit 6 – Tax Benefits
Setting yourself up as a real estate investor means you can claim or deduct expenses like property improvement or upkeep to offset your investment income.
You can also defer some of your real estate investment income by using IRAs and 1031 Exchanges. For example, as long as the profits from your real estate investment remain in your IRA, they will be tax-deferred until you buy another.
Meanwhile, 1031 Exchanges work by allowing you to take the profits from the sale of one property and invest them into another within a certain time period without having to pay taxes on those capital gains.
Benefit 7 – Sweat Equity is Rewarded
Just because you invest in a company’s stock doesn’t mean you can walk into their office and start making improvements in marketing while giving their retail outlets a thorough cleaning.
On the other hand, real estate investing actually rewards sweat equity. You can paint walls, replace hardware and invest your own elbow grease to actually improve the value of your investment.
Tags: 1031 exchanges, program benefit, property improvement, real estate investment, real estate investor, real estate investors, real estate values, risky stock, stable investment, stock investment