Investing in real estate has become a popular trade since past 50 years. Investment in real estate can give you a really good return. But buying real estate not only means finding a place to call home, but the truth is it is much more than it. Though real estate provides an ample amount of opportunity still it is important to understand that it is a complicated investment and is not similar to investing bonds and stocks. But still investing in real estate is good and in this article, we will tell you why.
- It helps you to gain more leverage
Investing the bank money for investing in real estate is very easy. Using bank’s money to buy real estate gives you the opportunity to make a down payment by which you can leverage your capital. With a sensible amount of investment, you can increase the total return on all the investment that you have made.
- Grow in a tax-free manner
Investing in real estate only on basis of speculation can prove to be very risky because in this business cash flow is the key to success. If you think of a long-term run and invest in a realistic property. Often real estate helps you to grow in a tax-free manner. But this is only possible if you follow a tax-deferred strategy for your investment. The tax liability can be further reduced by:
- 1031 exchange
- Charitable trust
- Installment sale
- Cash Flow in a tax-free manner
You will be glad to know that because of mortgage interest deductions and depreciation, your cash flow can occur almost in a tax-free manner. The majority of the investors of real estate has never paid taxes on their flow of cash. When one owns a property of the real estate, they can always wait for the future so that the capital gain on their property touches a new height which can only result in profitability.
- Reduction of taxes in other sources of income
This is a tricky party but if you discuss the prospect with a tax professional, you might find a way to use your real estate property for reducing tax in your other sources of income. However, it depends on the fact whether you are a real estate professional or an active investor.
- Convert Personal expenses to valid business deductions
You need to remember that investment in real estate is actually a business. And you can use this business for valid business reduction. Are you wondering how it is even possible? Well, your travel expenses for a look at your property and payments to the people who manage that property is actually deductible and you can use that to increase the benefits when it comes to the selling of the property in the future.
- It can be your good retirement plan
Saving money is not an easy job to do and therefore, most people fail to save their income. However, when you invest in a real estate business it becomes necessary that you give a certain amount of commitment to it. Though it might appear like a forced commitment in the beginning but the truth is it will benefit you a lot in the long-run. It is an easy way of building your future wealth and cash flow.
- It is an inflation proof investment
It is a no secret that rents often increase with inflation but the point that you should not that the mortgage payment on the property remains more or less stable. Do you know what does that mean? It means that there will be an increase in cash flow in your pocket but there won’t be any increase in the expenditure for holding that piece of real estate. When inflation will occur, the amount of rent that you will receive will also increase and this is definitely a win situation for you.
- It is easier to research on real estate
When you decided to invest in stocks and shares, you might be skeptical about it because investment in these elements requires proper knowledge of it. And apart from that, it holds many other complications. Investing in real estate might be bit complicated but research on the real estate is not. Research on real estate can be easily done online or by a simple visit in the suburbs and the auctions. You don’t need to be very knowledgeable to know which real estate can provide you with the maximum benefit and profit. You should in the beginning research on the rental homes in Virginia Water to have a fair idea about the profit that you can earn from the rental homes.
- You have 100% control on your investment
If you have ever invested in a stock market, you must know the fact that you need to pay a certain sum of money for the broker who works for you. Also, the value of your stock and share entirely depends on the conditions of the market which can’t be controlled by you. This creates a certain level of uncertainty in your investment. This is not true in the case of an investment in a real estate. When you invest in a real estate, you can proudly say that you directly own and this is a huge advantage for you. It is because you have the power to influence:
- The asset worth by adding value to your property
- Cash flow by increasing the rent of the property.
Asset worth of rental homes in Sunningdale is often increased by a slight amount of investment in a renovation that increases its value by many folds.
- You can sub-divide your real estate property
If you invest a good amount of money to buy a real estate property, you can own a huge property which can be later sub-divided to earn a profit. When you subdivide your property you have the option of selling just a part of it or the entire property for gaining a tidy property. But make sure that you invest in a right property to this.
Investment in real estate is a big yes because it will only give your profit and it involves no risk. You can earn the money that you have investment by the people who are on rent in that property. Basically, it’s a one-time investment after which you will get the money in your pocket without spending your money.