Are you a business entrepreneur or do you have the urge to get into some business? Do you want to diversify your business profits into something more than just a savings account? If yes, then real estate is probably designed for you. Despite the obvious benefits of real estate investment, you may still be doubting if the concept can work for you. A tough question indeed, but remember that the strategy isn’t a magic bullet. It never has and will never work by itself. Somebody must execute it.
There’s analysis to be done, coordination of purchase deals to be made, tenants to be managed, toilets to be fixed, and so on. That ”somebody ” is probably you. Frankly speaking, being in real estate investment isn’t always glamorous as most people think. All the same, it’s one of the best ways to create wealth over some period, especially if you have an entrepreneurial blood flowing in your veins.
Top benefits of investing in real estate
Cash flow
Quite some people invest in real estate simply because of the cash flow or the extra money that’s left after all the expenses have been settled. Needless to say, cash flow can provide passive monthly income. This can allow you to spend your much of your time building houses, diversifying into other areas of real estate or just traveling. Real estate cash flow is far more predictable and stable than what most other businesses offer. That’s great and gives some degree of comfort to an entrepreneur as he endures the ups and downs of venturing in real estate. Given, stable cash flow can help keep you afloat during the bad times and live like a king during the good times.
Bountiful tax benefits
Let me tease you a tricky question; if you I earn USD 200,000 through rentals and your own business earn USD 200,000, who get’s to keep more at the end of it all? Of course, I do. This is because the government somehow rewards rental property owners and not any other business. It does so by not subjecting the cash flow received from rentals to self-employment tax. Additionally, the government offers tax benefits such as depreciation and also lowers tax rate for long-term gross profits.
Property appreciation
Maybe you set up your real estate empire with a loan from a lending institution. The good thing is that as you pay the loan and as its outstanding balance diminishes day in day out, the value of real your property goes up day by day. Well, pundits might reason that that recession greatly affects the value of real estate. Yes! The recession does happen, but how often? Besides, property values go up and at times down. But, the unwritten rule is that people buy at the wrong time of the market and capitalize on it. Right?
A solid hedge against inflation
Have you ever paid twenty dollars for bread? of course no. Can you now imagine paying the same for a gallon of milk? Or six dollars for just a candy bar? True, these prices seem exorbitant or exaggerated, but this is exactly what the future holds for you courtesy of inflation. Inflation is simply an overall increase in price levels. With time, prices increase as the value of money falls. While most are afraid of inflation, rental property owners love it and pray for it to come.
When a bar of candy hits five bucks can you guess what other prices are going to shoot via the roof? Almost everything, including property values, rents, sugar, milk, soap, the list is endless. However, there’s something that won’t shoot. It’s your fixed-rate mortgage payment. As inflation pushes the cost of everything high up, your cash flow can only increase.