While investing your money in the stock market is generally recommended by many different financial professionals, it can still be very volatile, and to build wealth, you need to be willing to ride the waves. If you’re looking to earn additional income without the stress of monitoring Wall Street, you may consider investing in real estate. Entrepreneur Magazine suggests that real estate investments can create more predictable cash flow without as much volatility as the stock market. Typically, stocks or mutual funds are self-liquidating assets, while real estate is self-sustaining assets; this makes these types of investments very lucrative. Here are five reasons why you should be investing in real estate if you aren’t already.
1. Additional Source of Income
Investing in property or real estate can be a lucrative way of creating additional income. Not only that, but it can also be more of a passive way of generating long-term supplemental revenue. However, it’s recommended you pay cash for any investment you choose to make, whether it is residential or commercial. If you can’t afford the monthly payments outside of the income you generate with renters, then investing in property could create more financial strain than wealth. Commercial real can be a wise investment, but there are some things to keep in mind. Steven Taylor recommends researching the surrounding neighborhood first to understand the potential market better.
2. Specific Aspects of Real Estate are Tax Deductible
Owning rental properties require consistent maintenance and upkeep. Fortunately, there are tax codes in place that allow you to deduct the expenses associated with the property’s care. Certain deductions will generally offset earned income and reduce the amount you pay in taxes.
3. Real Estate Builds Equity
So, what is equity, and why is it important to you? Well, equity is the value of your property after deductions of charges. As you pay down the principal amount on your loan for your investment, the reduction builds equity or value, which puts more money in your pocket.
4. Real Estate Can be Improved
Sometimes a piece of a property similar to a diamond in the rough is one of the best investments because you can improve it to increase its value. With a little tender loving care, some elbow grease, or “sweat equity,” you can restore it without paying someone to do the repairs for you. However, according to Taylor Equities, if you plan to lease the property once it has been restored, it’s important to have a lease agreement in place, so your hard work is protected.
5. Real Estate Values Increase With Time
Even when the housing market dips and the economy fluctuates, your real estate investment should still make money. History suggests that the longer you maintain your investment, the more money you’ll collect if you hold on. According to Entrepreneur Magazine, each state in the US in 2017 saw an increased appreciation in home values.
Investing in real estate can be a great way to create an additional source of income without as much volatility of the stock market. Property values increase with time and are updateable, which also creates extra profit. Taylor Equities suggests that both residential and commercial property investments can be a lucrative way to build wealth.
