If you’re looking for a new way to invest your funds, real estate can be a great avenue. If you choose the right investment property you can experience great tax advantages and an excellent return on investment.
While there are some risks involved with any investment, real estate is an investment vehicle that many pursue. With that in mind, here are five reasons you should consider investing in real estate.
- Less risk and potentially better returns
Real estate tends to appreciate over time. Any loss that you may experience in the real estate market can usually be avoided by hanging onto the property for a longer period of time. As the market increases, the equity in your home will as well.
The risk in investing in the real estate market is easier to calculate than the risk of investing in the stock market. While there are times like the housing bubble burst, it is not such a common up and down roller coaster like the stock market. Property is a tangible asset that you are investing in which allows you to have more control over it as well.
- You have protection
When you invest in real estate, if the worst-case scenario happens you have homeowners’ insurance to cover your cost. This is not true in the stock market.
When you are covering your rental property, you want to make sure that you are planning for the worst instead of just expecting the best.
- More clarity
While there is no such thing as a “sure thing,” real estate can provide some clarity. Every time there has been a housing market bubble that has burst the market has always recovered in time. If you continue to hold onto your property you will see the numbers start to rise again.
- Diversification
Investing in real estate is also a smart way to diversify your investments strategy. Investing in property can be a good tangible asset to have in your portfolio along with riskier options. However, there are many people who only invest their funds in real estate and have found wealth by doing so.
- There are tax benefits
When you invest in real estate you get to take advantage of that on your tax return. There are deductions for your mortgage interest, your operating expenses, property taxes, depreciation, insurance, and the cash flow that you received.
If you are investing in real estate, you want to work with an accountant to make sure that you’re taking advantage of every tax benefit that you can. When you sell the property there are also ways to avoid paying the tax on the capital gains if you are reinvesting. This is also something to talk to an accountant about.
These are just a few of the reasons why investing in real estate is a good idea. If you have been toying with the idea of getting started take the time to talk to other real estate investors, real estate agents, and a good accountant. You will want to go in with the a strong plan for your investment, but if you do, you can find success.
