Did you know that the average Return-on-Investment for real estate on the stock market is about 10%? And this figure includes the severe dip in returns due to the 2008 financial crisis.
So is real estate investing worth it? The answer is a solid yes.
There isn’t just one significant advantage to investing in real estate; instead, there are multiple advantages that, when combined, make this asset class a desirable investment. A real estate investment, like stocks, may gain or rise in value over time while providing a source of cash flow via rental or mortgage income.
Real estate investors seldom consider one advantage as the only motivation to invest, but rather one or more benefits in combination. Keep on reading to learn all about the benefit of investing in the real estate market.
Is Real Estate Investing Worth It: Gaining a Tangible Asset
A piece of paper is all you have to offer to invest in an intangible asset like stocks or bonds. You are not entitled to anything. Your piece of paper may be worthless in the event of a stock market meltdown.
Real estate is a kind of investment that yields a tangible return. Even if you decide to get out of the venture, you still have a piece of real estate to sell. You may never be sure how much money you’ll end up with over time, but tangible assets are worth something.
There are more steps involved in selling something that is a physical asset than an intangible service or good. In the end, you’ll still walk away with your original investment and, if everything goes according to plan, a potential cash gain.
Value of Real Estate Tends to Increase With Time
Buying a house is a long-term investment, and as such, it is likely to increase in value over time. Many times, the value of a structure or a piece of land increases with time. However, occurrences like the 2008 housing crisis are rare.
You may also increase the value of a home by remodeling or enhancing it. To get a better return on your investment, you may either purchase a property at a discount and fix it up to sell, or you can remodel a rental property and raise its value even quicker than natural appreciation.
Using Your Equity to Your Advantage
You may use the equity you build up through paying down your mortgage and improving the property’s worth to expand your investment portfolio. The difference between the value of your house and the amount you owe on your mortgage is known as equity. Your profit is based on any discrepancy.
Maintaining your property means that you won’t be able to tap into the entire worth of your equity, but you may be able to utilize the equity you do have to fund future real estate purchases.
You do not have to wait until you have enough money saved up for a 20%-30% down payment on a new property to expand your portfolio.
Enjoying the Flow of Cash Flow
Renting out your buy-and-hold home is a great way to generate regular monthly income.
Investments that don’t provide dividends are rare. At the very least, they may pay dividends, although you may only get them once a year or once every few months.
Getting Tax Deductions
There are relatively few tax benefits to owning an investment property that you live in. Most of the time, even if you itemize, your sole tax deductions will be for real estate taxes and mortgage interest. Homeowners can’t benefit from real estate savings since most don’t itemize their deductions.
It is a business rather than an investment when you acquire and keep real estate and rent it out for profit. Many deductions are available to you as if you were running a brick-and-mortar business.
You may write off any expenditures you spend to maintain the property, conduct business, or even travel to the property. As a result, you pay less in taxes and make more money.
Simple Way to Save for Retirement
Real estate is a long-term, non-transferable investment. You make a long-term commitment to it. You build equity in your property over time. Selling the property while you’re in retirement or nearing it may help you fund your retirement.
It’s referred to as a “forced retirement plan” by some. You don’t have a 401K or IRA, but you still pay your mortgage each month. It is possible to invest in your retirement without contributing money each month if you let the home be rented out.
Different Options to Diversify Your Portfolio
Real estate is a popular long-term investment because it offers a steady stream of rental income and may be used to build a nest egg for retirement. When it comes to real estate investing, there are many choices. Roofstock Marketplace, for example, gives you access to a wealth of data that will help you make an informed decision about a property, including financial data.
Fixing and flipping may be fun if you’re a fixer-upper sort of person. This entails locating undervalued real estate, repairing it, and then reselling it.
It usually occurs within six months, so there aren’t many expenditures associated with holding on to the property. You may do this as many times as you want until you meet your objective of earning a certain amount of money.
Of course, you can always leave your entire portfolio in the hands of professionals such as those at ballardbuilt.com.
Real Estate Investment Opportunity: Simplified
For those who are uninitiated in the science of financial investment, the real estate market can look somewhat overwhelming at first. But, since the answer to the central question of “Is real estate investing worth it?” is a yes, it’s more than worth the time and effort to do some research.
We hope that our guide has shed some light on the plethora of perks to investing your money in real estate in its different iterations and forms. And, if you liked reading our article, we can assure you that you’ll love our other explainers and strategies in our finance and real estate sections.