Real estate, especially residential property and office space, is often perceived as an expensive investment, but the truth is that it can be a profitable one too. Real estate has many advantages as an investment.
It can give you regular income through rent, it has a potential for appreciation in value, and it’s also a fairly stable investment compared to other types of assets. In this article, Richard Zahn will discuss why real estate is a good investment and what are the main benefits of investing in real estate. Keep reading to know more!
Investing in Real Estate Is a Safe Investment
When it comes to investing, the first thing that comes to mind is safety. Real estate is a good investment because it is very safe. When you invest in the stock market, there’s always the chance that the value of the shares will go down. When you invest in bonds, there’s a chance that the interest rate will go down.
There are two scenarios in which your property value will go down: a sudden drop in the housing market, and a sudden decrease in the number of people wanting to live in the area. These are unlikely to happen in your lifetime. This is why investing in real estate is a safe investment.
You Can Earn Regular Income Through Real Estate Investment
If you decide to invest in real estate, you can also get an income from renting out the property. Residential properties are usually rented out on a short-term basis. Commercial properties are usually rented out on a long-term basis.
If you rent out your residential property on a short-term basis, you’ll probably earn less in a month than you spent on the mortgage. But if you rent it out on a long-term basis, you’ll earn enough to cover the mortgage payment. You can even earn more. If the property is in a desirable location, you can increase the rent every year.
Real Estate Is an Excellent Tax Shelter
Real estate has a high potential for appreciation, so you can sell it at a high price and therefore claim a large profit. When you sell a residential property, you’ll be taxed on the profit you made. But real estate is an excellent tax shelter.
When you sell a residential property, you can write off the mortgage loan against the profit you made from the sale. Residential property is an even better tax shelter than commercial property because you can write off the mortgage for both properties.
Selling Your Property Means You Have Cash on Hand
Lastly, selling your real estate is straightforward. You find a buyer, come to an agreement, and then close the deal. This might take a few weeks. When you sell your real estate, you have cash on hand. You can use it to buy more real estate, pay off debt, or fund your retirement.
If the real estate market is in a downturn and you’re having trouble finding a buyer, you can always rent out the property. Real estate investment is a good idea because you don’t have to plan on selling it right away.