To be financially stable and successful, it’s essential to have different streams of income. From having side jobs to starting a business to investing, there are several ways to earn more. If you’re looking for a good investment and you have the capacity to invest in real estate (e.g., buy a new house, buy a rental property, flip a property), your Financial Advisor will strongly advise you to do so.
Here Are Eight Reasons Why Real Estate Is Always A Good Investment.
It offers better returns. In Financial Planning, investment is considered sound if it offers good returns. Compared to investing in the stock market, real estate investment offers better returns. Real estate appreciates at 6 to even 9% a year while a money market investment is only at 1 to 2%.
Its value appreciates. Real estate — whether it’s land or real property (e.g., house, apartment) — is considered a tangible asset. It’s a physical thing that has a monetary value. And this value appreciates over time. You can gain significant profit once you find the right timing to sell the real estate. While waiting for that time, you can earn income by renting it out to other people.
It can be improved. If you ask a financial advisor about real estate investment, you’ll learn how advantageous it can be when it comes to improving its value. When you furnish a property, do a home addition, convert a basement into a more functional space, or improve its landscape, its market value will increase. With that, you’ll be able to sell it at a higher price.
It allows you to diversity your portfolio. When investing, it’s important to put your eggs in different baskets. If you diversify, you won’t lose all your money should one of your investment channels goes south. One great way to diversify your portfolio is through real estate investment. It’s a safe choice because, as stated, it has a value that appreciates over time.
It provides several tax benefits. If you tap a financial planning expert, you can make the most of your investment by taking advantage of different tax incentives. If you own the house, you can deduct mortgage interest. If you’ve got investment properties, you can also make operating expenses tax-deductible. Once your sell investment properties, your capital gain taxes will be at 15 to 20%, which is lower than your personal tax bracket.
It is depreciable. According to tax regulations, depreciation is a non-cash expense that can be considered tax-deductible. Because real estate is depreciable, you can report a lower income for tax purposes while generating a bigger cash flow.
It is a natural inflation hedge. Prices of products and services inflate over time. However, real estate acts as a natural inflation hedge because it’s not strongly affected by stocks or corporate profitability. Real estate’s being isolated, in this aspect, helps maintain its monetary power.
It’s good for the community. When you invest in real property and you rent it out to other people, it benefits the community because you’re providing people a space to live in. A rental property located in a bustling neighborhood can also help improve local tourism.