Investing in real estate offers a multitude of benefits. Real estate can be leveraged to create wealth. If you're considering real estate investment, here's what you should know about its benefits and why it's a wise choice.
Cash flow: Cash flow refers to the income remaining from a real estate investment after deducting mortgage payments and operating expenses. Real estate investing offers the advantage of generating consistent cash flow, which often improves as you pay off your mortgage and build equity.
Appreciation: Real estate is a very lucrative investment with a high return. Landed properties have a high increase in value. It appreciates in value a lot. Its value always increases over the years. There have been testimonies of investors getting land for a lower price, especially in rural areas, and after a few months or years, they sell it at a very high price. The longer you hold on to land, the higher the price will be sooner or later. It could also be a building.
It beats inflation: Real estate is one of the few investments that is not affected by inflation. Inflation is persistent rise in general prices but decrease in people’s ability to purchase goods and services. Real estate are not affected at all because their mortgage prices remain the same but increases due to increase in demand for rent. This increase is due to people’s inability to purchase a land or buildings because of the increase in the price.
It is a tangible asset: When you invest in intangible assets like stocks or bonds, you only have a piece of paper. But with real estate, you have a tangible asset that holds value. While property values can fluctuate, you still have something to sell if needed. Selling real estate takes time due to negotiations and legalities, but you can expect to recoup your initial investment and potentially make a profit.
You Can Leverage Your Equity: As you pay your mortgage balance down and/or renovate the property to increase its value, you can leverage the equity to further your investments. The equity in your property is the difference between your home’s value and the amount you owe on your mortgage. Any difference is your profit. If you keep the home, you can’t use all of the equity, but you may be able to take out up to 80% of the home’s value, using what’s left to invest in more real estate. This is a great way to increase your portfolio without waiting until you have enough money saved for a 20% - 30% down payment for another home.
It’s a Great Retirement Savings Plan: When you invest in real estate, it’s not liquid. You invest in it for the long term. As time passes, you earn more equity in the home. When you’re in retirement or near it, you can sell the property and use the profits to get you through
Less money needed in investing: Many people assume they need a ton of money to buy investment real estate. You don’t. When you find the right property with the help of a reliable platform, you’ll have an easy time getting financing if you have decent credit and have your debts under control. When you can get traditional financing, you need only 20% - 30% of the sales price to put down on the home. This means you can leverage your investment - investing in an asset worth much more than you invested. If the property value increases, you earn an even larger return on your investment.
Opportunity for hands-on investment : Real estate investment provides you with the opportunity for hands-on involvement. You have the option to manage the property yourself, hire a property manager or even partner with other investors to share the responsibilities. This hands-on involvement can also help you to understand the real estate market and identify potential investment opportunities.
Networking opportunities: Real estate investment can also provide entrepreneurs with networking opportunities. For example, you can connect with other real estate investors, real estate agents, contractors and property managers. These relationships can be beneficial for your business in various ways, such as identifying potential acquisition targets, finding new customers or even finding new business partners.
Legacy building: Finally, real estate investment can also serve as a means of legacy building. By investing in real estate, you are not only building wealth for yourself, but you are also creating a legacy that can be passed down to future generations. This legacy can provide your family with financial stability for years to come and can be a source of pride and accomplishment. It also just adds to the legacy you're already building through your business.