Investing In Real Estate: 3 Reasons You Should Consider the Property Market
Investing is a lucrative venture!
In the world of investment, there are four asset classes that you can engage in. These include;
· Real estate; land, properties (commercial or residential)
· Businesses; wholesale or retail
· Paper; stocks, bonds, mutual funds, foreign and local currencies
· Commodities; food, gold, silver, cryptocurrencies
Each asset class bears its advantages and disadvantages. As an investor, you need to be financially literate to make the right investment decisions. Your crucial role as an investor is doing due diligence. That means you should be an active rather than a passive investor.
In this article, you’ll discover the key reasons why real estate is a good investment for you.
#1. You Earn Passive Income
The majority of investors prefer real estate to other asset classes. The principal reason is passive income. You don’t have to be actively involved in this venture. Your income will come from your tenants.
Out of your busy schedules, hiring the services of a property manager will help you realize the dream. Their primary assignment is to market your property to potential tenants. Besides, they also take care of the property while you are away.
Occasionally, you can be visiting the property or properties if you have multiple of them to assess their status. Doing that will also help you interact with the tenants on a personal level.
Hiring a property manager will help you focus on other areas of your life while earning passive income from real estate. Eventually, as your money works for you, you will be able to live a balanced and full filled life.
#2. You Can Capitalize on Leverage
Financially literate investors know the power underlying leverage. Leveraging enables you to use other people’s resources. Isn’t that amazing?
Likewise, investing in real estate gives you the power to use leverage as you minimize your risk exposure. You can leverage in the following ways;
· Investment capital
· Other people’s time
Real estate is a tangible asset. This means financing is relatively easy. You can readily get funding from your local bank or any other financial institution that you are a member of. Since the returns from real estate are almost guaranteed, even if it’s in the long term, your banker will not turn down your proposal.
Besides, you can use the property as collateral. You get into an agreement with the bank, they finance the project then you agree on a profit-sharing strategy. However, there is a catch in this. You need to be in good financial standing with them.
Also, by hiring the services of a property manager, you will be leveraging on their time. The benefits are appealing. You will agree with me.
· They run and manage the business for you.
· They do the marketing on your behalf
· They engage with clients on your behalf
· Most importantly, they make money for you without necessarily being present.
You can, therefore, continue engaging in your other ventures as you let professionals take care of your real estate investment.
#3. Taxation and Other Deductions
As a real estate investor, the law permits you to enjoy some taxation benefits. From your annual real estate income, you will deduct the cost of financing. Besides, you will also deduct the cost of managing the property.
Some of the deductions you will enjoy are;
· Property taxes
· Mortgage interest
· Property management fees
· Repairs and maintenance.
Additionally, you can still deduct other related expenses from that income. Provided the costs were incurred directly from the business activities, the law permits you to deduct them. This will eventually limit the amount of tax you pay to the government. This is one of the ways the government pays you for creating housing infrastructure.
Final Thoughts
Investing in real estate is very lucrative. Besides earning passive income, you will also leverage other people’s money and time. Additionally, you can make business-related deductions from your gross income.
However, you’ll need to do due diligence on your side. Active investors reap the highest returns ever. So what are you waiting for? Visit your nearest real estate and property management firm, and find out how to get started.
