There are several options to choose from when it comes to investing our hard-earned money. One of those options is investing in real estate. It is necessary to do your due diligence and make wise choices regarding owning real estate, but those decisions can really pay off in the long run.
Let’s discuss four of the many benefits of investing in real estate.
1. Paying the Mortgage: When you are investing in real estate through a mortgage and that property is available for rent or lease, the tenant is actually paying the mortgage. Depending on the rental market, the renters could pay most, all or even more than the mortgage. As the owner, you are building equity without as much expense. Even if the rent doesn’t cover all your expenses, it can be worthwhile to own a rental property because you’re building equity by leveraging the income you collect from your tenants.
2. Appreciation: Real estate will always be subject to economic adjustments, but if you hold your investment long enough, it may likely increase in value. Investing in real estate is typically a long-term investment and the longer you hold onto it, the more value it will accrue.
3. Cash Flow: Real estate holdings often result in money left over after the bills are paid. Investing in real estate is a business and if operated as such, it can generate passive income that will allow you to invest in more real estate, build your business or take a well deserved vacation.
4. Tax Benefits: Cash generated from rental or lease property is not subject to self employment taxes. In fact, the government offers tax benefits including significantly lower tax rates that add to long-term profits. Talk to a good accountant for advice.
For more information about real estate, please contact us.