This is not a get-rich-quick scam. Ask millionaire entrepreneur and author Robert Kiyosaki: Real estate investing is a tried and true practice. And a lot of money can be generated — if you do your research and align yourself with trustworthy professionals.
Why Real Estate is the Smartest Small Business Idea (and the Best Way to Work from Home)
1. No Overhead
Most small businesses require start-up capital, so you can purchase office, retail and/or manufacturing space, plus all the equipment. Real estate investing, on the other hand, can be done from anywhere, with basic tools you have at home: a smart phone, a computer, and maybe a desk and chair.
2. No Inventory
If you’re wholesaling real estate, you’re finding deals and passing them on, at a profit, to another investor — without holding onto anything. If you’re fixing and flipping, the timeline is longer, but you’re likely leveraging transactional funding (a short-term loan) to finance the deal from purchase to sale (with no credit check or income verification needed). And if you do end up with inventory, it’s earning you income.
3. Variable (often Low) Cash Requirement
When you’re wholesaling, you don’t need any capital (or credit) at all! The more deals you complete, the more money you’ll have in savings. That’s when you can elect to buy and hold properties for passive income. If you’re fixing and flipping, you can use transactional funding.
4. No Employees
There’s no rule against hiring full-time employees, but you don’t need them to be successful — and they can even hinder your success.
As reported by CNN Money, an employee you hire for $14/hour will probably cost you closer to $20. There are salaries, payroll taxes, benefits and retirement plans; paid vacation, sick days and maternity leave; certifications, conferences and trainings; office perks to maintain morale; and employee turnover costs.
But as a real estate investor you can simply hire contractors, freelancers, consultants, and interns.
5. Inflation Resistant
As economies expand, the growing demand for real estate drives rents higher, leading to larger capital values. And by responding to inflation by passing some of the pressure onto the tenants and absorbing the rest through capital appreciation, real estate is able to maintain its capital purchasing power.
6. Deflation Resistant
Unlike stock and bond investors, even during the 2006 market crash, real estate — and especially rental — investors were able to endure devaluations. In fact, people losing their homes to foreclosure expanded the rental market, increasing demand. Rental investors held on to their inventory and continued to earn income while values recovered.
7. Tax Advantages
Again in contrast to investors in more traditional asset classes, real estate — and especially long-term rental — investors can take advantage of a variety of lucrative tax breaks. This includes leveraging Section 1031 of the Internal Revenue Code, as well as deductions for:
- Real estate taxes
- Mortgage interest
- Property insurance
- Acquisition costs
- Maintenance expenses
- Marketing/Advertising expenses