If you’re thinking about investing in real estate, you’re about to embark on one of the best investment journeys of your lifetime. even if you’ve never invested in real estate before.Thinking about investing in real estate? Here’s what you need to know about real estate benefits and why real estate is considered a good investment.
What Is Real Estate Investing?
You have plenty of options when it comes to investing in real estate. You can purchase a single-family home, rent it out and collect monthly rent checks while waiting for its value to rise high enough to generate a big profit when you sell. Or you can purchase a small strip mall and collect monthly rents from hair salons, pizza restaurants, mattress stores and other businesses.
Reasons To Invest In Real Estate
Let’s take a look at some of the top benefits of real estate investing:
Immidiate Results And Returns
Investing in rental properties is one of the biggest sources of generating passive income for property owners, not to mention that it is almost tax-free. Starting from the very first month, renters start paying a certain amount of money as the house rent as per the terms of the legal contract. It means you may not have to wait for years or even months to enjoy the return on your investment. In fact, you might start earning profit within days. Such quick returns, as we see in the case of renting out properties, are not guaranteed with any other types of investments.
Long-Term Security
Real estate is always a long-term investment, meaning you can keep it on hold for several years for it to appreciate .At the same time, renting out your real estate property can fetch a good monthly income while you wait for your property’s value to rise.
More Control Over Your Investment
One of the key reasons to invest in real estate is that it comes with a minimum risk of loss, and your investment can’t disappear overnight. Furthermore, investing in real estate gives you more control over your investment since properties are tangible assets, which can be leveraged to capitalise on different revenue streams. You get the opportunity to build your wealth with better return rates and tax advantages.
Competitive Risk-Adjusted Returns
Real estate returns vary, depending on factors such as location, asset class, and management. Still, a number that many investors aim for is to beat the average returns of the S&P 500—what many people refer to when they say, “the market.”
Real Estate Investment Trusts (REITs)
If you want to invest in real estate, but aren’t ready to make the jump into owning and managing properties, you may want to consider a real estate investment trust (REIT). You can buy and sell publicly-traded REITs on major stock exchanges. Many trade under high volume, meaning you can get into and out of a position quickly. REITs must pay out 90% of income to investors, so they typically offer higher dividends than many stocks.
Real Estate Provides Cash Flow
If you invest in a buy-and-hold property, you can rent it out and earn monthly cash flow. Most investments don’t provide cash flow. At the very least, they may provide dividends, but you only receive them quarterly or sometimes annually.Depending on how you manage your property, real estate can be a passive investment.
Great Retirement Savings Plan
When you invest in real estate, it’s not liquid. You invest in it for the long term. As time passes, you earn more equity in the home. When you’re in retirement or near it, you can sell the property and use the profits to get you through retirement.Many call it a forced retirement plan. You aren’t putting money away in a 401K or IRA, but you pay the mortgage every month.
