As Jeff Yass once wrote, "If you invest and don't diversify, you're literally throwing out money." Centralizing all your assets and investments in one place is a risky strategy. Even with all its changes, real estate investing is a sure way to diversify your portfolio and provide cash flow even in retirement. However, many people are still unaware of the benefits of investing in real estate or how to get started.
As an established player in the market, we've got our finger on the pulse when investing in real estate. Here are the top seven reasons we believe real estate is an excellent investment—whether you're just getting started or looking to expand your portfolio.
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You Have Better Control Over Your Success
Investing in stocks and other securities can be a great way to earn passive income, but it leaves you at the mercy of the market. When the stock market struggles, your investment portfolio may take a hit.
When you invest in real estate, you're investing in a physical asset that can be leveraged to generate income. You're also investing in your future success by building equity and creating wealth. Whether self-managing or working with the right property and management team and contractors, you can control your income and success—giving you the potential to build a passive income stream without doing all of the work yourself. -
There Are Many Tax Benefits for Real Estate Investors
The government offers a variety of tax benefits for those investing in real estate. These tax breaks can help offset owning and operating an investment property, making it a more affordable investment. For example, the interest you pay on an investment property mortgage is often tax-deductible. This deduction can save you money come tax time, leaving more money in your pocket to reinvest in your property, cover other expenses, or put toward your next property.
Additionally, if you're investing in a fixer-upper, you may be eligible for the capital gains exclusion. This exclusion allows you to exclude up to $250,000 (or $500,000 for a married couple) of your profits when selling a residential property.
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You Can Invest Without Owning Properties
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate. REITs allow investors to pool their money and invest in a portfolio without owning (or managing) any property. Investing this way provides the benefits of diversification and professional management while still allowing you to reap the rewards of investing in real estate.Choosing this type of investment trust can be an excellent way to diversify your portfolio and get started in the real estate market for new and seasoned investors.
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It Allows You to Generate Passive Income
One of the best things about real estate investments is the potential to earn passive income. Money comes in while others do the work for you!
Often, investors employ the help of a property management company to take care of the day-to-day tasks associated with owning a rental property. This can include finding and screening tenants, collecting rent, handling maintenance and repairs, and more.
While real estate investments do require some work up front, once you have a team in place, the income is typically passive.
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You Can Inherit (or Give) Investment Properties
Another benefit of owning real estate is passing it down to future generations. Unlike other investments, such as stocks and mutual funds, real estate can be passed down to your heirs without incurring any taxes.
Inheriting real estate can be a great way to create intergenerational wealth and ensure that your hard-earned money continues to grow for years to come.
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You Can Use Equity to Purchase Properties
If you're looking to invest in real estate but don't have the cash available, a home equity loan can be helpful. A home equity loan allows you to borrow money against the equity you've built in your home, which investors can use to purchase additional properties.
With this method, you can buy investment properties without using any of your own money, which can help you grow your portfolio quickly. However, it's important to remember that a home equity loan is still a loan—meaning you'll need to make monthly payments and interest on the outstanding balance.
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It's Consistently Less Volatile Than Other Ways to Invest
In recent years, the stock market has proven to be malleable and volatile, which has led many investors to seek alternative options. Real estate investing has historically been a much more stable investment, providing consistent growth and less volatility than the stock market.
When putting your money in real estate, you're investing in a physical asset that can be used as collateral that provides a level of security not found in other investments. Many people view this as a safe and reliable way to grow their money.
Use Privy to Make Smarter Investments With Higher ROI
We hope investing in real estate sounds pretty good by now! Privy is a real estate search platform that helps you make smarter decisions with your investment dollars. By scouring the MLS for properties matching your needs and descriptions, Privy provides users with real estate investment opportunities that have the potential for high ROI.
Learn how to create wealth investing in real estate the right way. Start using Privy today to find incredible real estate opportunities!
Tap into more investor insights with a free copy of “How to Invest In Real Estate: A Guide!”
