Real estate investing, when done right, is simply anyone’s shortcut to making money and getting rich.
Despite the existence of a number of different investment types all around the world, real estate investing remains one of the top and most profitable types of investments, with the number of real estate investors increasing exponentially on a regular basis.
So, what sets investing in real estate apart from other types of investments, and what are the major advantages associated with investing in the real estate market? Let’s find out!
Why Real Estate Investing
When considering investment options, most investors typically resort to one of two investment markets: the stock market and the real estate market.
While the stock market offers great opportunities for profits and returns, it is generally known to be a volatile market, and several investors find themselves facing bankruptcy due to failed investments and market volatility.
Real estate investors, on the other hand, are typically in a more secure position when it comes to their investments, as the real estate market is not as volatile, and it is much easier to predict and analyze to determine the expected return on a real estate investment, lowering the chances of failure.
Additionally, ad while real estate investing doesn’t generally result in profits that are as high as the stock market, the real estate market still has a number of great advantages that make it a top choice for investors of all kinds.
Millennials, for example, prefer real estate investing over the stock market due to real estate properties being tangible investments, and due to real estate investors having greater control over their real estate investments. Real estate investors can interact and manage their investment properties for a more personal approach to their investments in order to help their property succeed and be profitable for them.
So, what are the major benefits that are tied to real estate investing, and how do they make investing in real estate a top choice for beginner and experienced investors alike?
Cash Flow
One of the most common types of real estate investing is investing in rental properties. Rental properties are a popular choice for real estate investors due to their cash flow – the rental income that the landlord or owner of the rental property earns each month from renting out the investment property.
Cash flow is a great asset in real estate investing, as it allows real estate investors to earn money on a regular basis, which goes towards their mortgage payments, resulting in the loan getting paid off by the tenants instead of by the real estate investor who owns the property. Of course, in order to achieve a positive cash flow on their rental property, a landlord would need to manage the property and the real estate investment in order to maintain a high enough occupancy rate for the property to be making a profit.
Tax Benefits
There are numerous tax benefits to owning an investment property. For example, a real estate investor who owns an income property/rental property will not pay self-employment taxes on the rental income he/she receives from the investment.
Additionally, the government offers a number of other tax benefits for real estate investors including depreciation and lower tax rates for long-term profits. What is depreciation? Depreciation is the reduction of tax amounts based on the decrease in the value of accessories and installments in your investment property over time due to these objects having a set duration or expiration date.
Loan Payments
As mentioned above, one of the greatest benefits of real estate investing is the ability to pay off your loan payments through rental income, which practically means that your tenant will be the one paying off the mortgage for you. Naturally, this will result in most of your rental income going towards paying down the loan, and your cash flow might be much lower than expected. However, once the mortgage loan has been totally paid off, the rental income that you earn each month will turn into pure profit, and your cash flow will skyrocket, causing you to earn much more money on a regular basis.
Additionally, investing in real estate means that you have a very wide variety of loan types and mortgages that are available for you, each being tailored towards a specific type of real estate investment or strategy, which makes it optimal for your choice of investment as a real estate investor.
Appreciation
Perhaps the single most valuable advantage of real estate investing and real estate properties is appreciation. Appreciation is simply the increase in the value of a real estate property, investment or home, over time due to any number of different factors.
While appreciation is typically difficult to predict, and shouldn’t be the main factor to make your investment decisions on (it is typically referred to as the icing on the cake), there are a number of different indicators that can help real estate investors predict appreciation on an investment property or on an area. Mainly, in order to predict appreciation, you will want to look for any signs of future developments in the area, such as public transportation, new schools, hospitals, shopping malls, etc., which are signs that the value of the real estate properties in the area will fluctuate, resulting in the price of the property going much higher, and allowing you to sell the property for a higher price than what you originally paid for it.
Inflation Immunity
While inflation is usually never a good sign for any investor, in the real estate market inflation can be an opportunity for profit, and it’s never a cause of loss. In general, real estate properties are not affected by inflation. Although the costs of repairs and renovation materials might go up, the main costs of running an investment property and the property itself will remain stable.
Additionally, real estate investors can use inflation for their own advantage due to the higher rent rates that will result from inflation on a large scale, allowing landlords to ask for higher rents without suffering from a drastic increase in the costs associated with running their investment properties.
Control
Last but not least, one of the major advantages of real estate investing is – FREEDOM. As a real estate investor, you have full control over your business, your investment, your property, and your finances. You are your own boss, and the success or failure of your real estate investment will be determined by the amount of time and effort that you put towards your investment.
Bottom Line
Real estate investing is a top choice for many, and certainly the top choice for us at Mashvisor, due to the high variety of opportunities that exist in the real estate market and the accessibility of it.
This is why we, at Mashvisor, chose to target real estate investing and created a platform dedicated to helping real estate investors and providing them with services that can allow them to make their investments with more ease and at a faster pace than ever before, based on the real estate market of their choice.
Make sure to check out Mashvisor and the value that it can add to your real estate investment business, and once you’re ready to get started on your real estate investment venture, head over to our website and sign up to start your journey using our platform with efficiency and ease.