Real Estate refers to land and improvements, including buildings, fixtures, roads, utilities together with the natural resources attached to it.
So why should you engage in a real estate business?
Because it’s profitable. But when you hear real estate, people tend to get intimidated. Like stocks, mutual funds and other investments, each has its own level of risks and it’s up to you how to manage them.
There are many misconceptions about this industry so let’s start with disproving them first.
Real estate is expensive
Do you need to be a high-income earner to invest in real estate? Definitely not. While it is true that you need capital, this necessarily need not be in million dollars. There are people who started with modest salaries but actually succeeded in this industry.
In fact, when purchasing real estate, you don’t have to pay it fully at once. Some banks or lenders require small down payment terms and the rest can be amortized through debt financing.
Your money could be idle for a long time
Since you are waiting for the land value to appreciate, your money can be stuck for a long time. Like in stocks, this is what we call – a long term investment. We let time pass before we realize the gains.
But in real estate, you can have a different strategy. You can sell the property anytime you want. You can buy, flip, and sell a property within a short period of time and make a profit.
You need a wide network
Are you afraid that you don’t have enough connections to enter the industry?
A huge network is important when looking for a potential property to buy. It also helps recommend a steady market to whom you can sell a property.
But with the help of technology, the internet, and social media, you can establish the network you need. You need to improve your research skills as well as marketing abilities.
Now that we have clarified some real estate myths, here are 5 reasons why you should invest in real estate.
1. Real estate appreciates in value
That land at the farthest side of the region costing hundred dollars today might be multi-million worth 10 years or more from now. This was the mindset of early investors and they were not wrong.
Because of continuous development, it is not impossible.
This is a long term investment though. While holding property at a period of time has more chances of greater earnings, this is certainly not the only way to earn money in real estate.
2. Passive income
Rent out your property. This provides a steady flow of income and financial security.
Try Airbnb. Take advantage of technology especially when your location is near a tourist destination.
Another way to earn is through buying and selling. Discover a property, make improvements as much as possible then sell. What is interesting about this is you don’t have to do this alone. You can employ agents and let them sell your properties for a commission.
3. Tax deduction
As a rental property owner, you are entitled to numerous tax deductions. Mortgage interest, maintenance repairs, insurance, and property taxes can be written off. The government allows you depreciate assets based on depreciation schedule even though your property is actually increasing in value.
4. Hedge against inflation
While many people worry about inflation, real estate investors do not. They are protected because when the price of commodities goes up, so does rental income. The mortgage becomes expensive so renting becomes in demand. Price increases with higher demand because more people are bidding up the price.
This applies to the flexibility of schedule and flexibility of payment methods.
In real estate, you are your own boss. You set your own schedule. You make decisions on what property to buy, hold and sell. You decide on who will be your tenant, rental charges and how you maintain your property. You have complete control over your investment properties and you develop your own strategies to win.
Real estate is easy to finance because many lenders are willing to offer attractive interest rates. Some require a little down payment and even no down payment at all. You just have to be resourceful. You can also invest in crowdfunded real estate or have the rental income from tenants pay for your amortization.
Like any other investment, you should be willing to put in some work. Take time to study the trends and talk with the experts. Real estate offers an unlimited earning potential if you get serious about it.
Diversify your portfolio and consider investing in real estate now!