10 Reasons To Invest In Real Estate

While investing in real estate does come with potential pitfalls and does require research, it can also bring plenty of cash to your bank account. Here are some of the most important reasons to invest in real estate. (Just remember: Appreciation and cash flow aren’t guaranteed. You must research properties and neighborhoods to increase your odds of generating a profit.

1. Steady Cash Flow

Owning real estate is a way to boost your monthly income. Whether you invest in commercial real estate or residential, you can rent out your space to tenants. You’ll then receive monthly income in the form of rent checks. Just be careful: You’ll need to research the payment histories of your tenants if you want to reduce the chance that these tenants will one day stop paying their rent.

2. Great Returns
If the real estate you own increases in value over time, you can sell it for a solid profit. Remember, though: Appreciation isn’t guaranteed. You’ll need to invest in the right property to see those big returns.

3. Long-Term Security

Real estate is a long-term investment, meaning you can hold it for several years as you wait for it to appreciate. At the same time, if you rent out your real estate you can earn monthly income while you wait for your property’s value to rise.

4. Tax Advantages

Investing in real estate comes with tax benefits. You can deduct several expenses associated with owning an investment property, including your property taxes, mortgage interest, property management fees, property insurance, the costs of ongoing maintenance, the cost of repairs and the money you pay to market your property to potential renters. If you sell your property for more than you paid for it, the gain you realized won't be taxed as income. Instead, it will be taxed as capital gains, which typically come with lower tax rates than does income. If you invest in opportunity zones – neighborhoods that are in need of investment – you'll pay even less in capital gains.

5. Diversification

Adding real estate to your investments boosts your diversification, which can protect you in times of economic turmoil. Say certain stocks are suffering because of an economic downturn. The investment properties in your portfolio might still be increasing in value, protecting you from the losses your other investments are taking.

6. Passive Income

Investment properties bring much-desired passive income, that which you don’t have to work for every day. Say you charge rent on a single-family or multifamily property. The rent checks that come in each month are an example of passive income.

7. Ability To Leverage Funds

When investing in real estate you probably can’t afford to buy properties in full. After all, that single-family home you plan to rent might cost $200,000 or more. That’s where leverage comes in. Leverage in real estate means you’re using other people’s money to purchase properties. In this case, you’ll take out loans from banks, mortgage lenders or credit unions and pay them back over time. This allows you to add to your real estate holdings without spending the full amount of money you’d need to buy them on your own.

8. Protection Against Inflation

Real estate investments are considered protection against inflation. When the prices of goods and services are rising, home values and rents typically increase, too. Investment properties, then, can provide you with rising monthly income and appreciation to help protect you financially when the costs of everything else is going up, too.

9. Chance To Build Capital

The big goal of real estate investing is to increase your cash, otherwise known as building capital. When you sell a property that has risen in value, you’ll boost your capital. The key, of course, is to invest in the right properties that will rise in value.

10. Fulfillment And Control

Owning investment properties comes with other benefits that aren’t financial. When you own investment real estate, you are your own boss, which is fulfilling to many investors. You can also make a difference in your community, providing homes for renters or bringing businesses to commercial properties that will provide much-needed services to their communities.

How Real Estate Compares To Other Investments

All investments come with pros and cons. Here’s a look at how real estate compares to other popular investment types.

Real Estate Vs. Stocks

Real estate is less volatile than stocks, whose value can rise or fall more quickly. But real estate is less liquid than stocks: It’s easier to sell your stocks and gain access to your money than it is your real estate investments.

Real Estate Vs. Bonds

Bonds are one of the safer investments. You usually won’t lose money by investing in them. Their gains tend to be smaller, though. You have the chance to make higher gains by investing in real estate, though your risk of losing money is also higher.

Real Estate Vs. CDs

Investing in CDs is similar to investing in bonds: These are among the safest of investments, and it’s rare to lose money when investing in them. But like bonds, your gains are generally lower than what you might earn when you invest in real estate.

Real Estate Vs. Mutual Funds

Mutual funds are a long-term investment. Generally, if you hold onto your mutual fund investments long enough, they’ll increase in value, though appreciation is not guaranteed. Like with stocks, it’s easier to invest in mutual funds than in real estate. Real estate investments, though, can provide a hedge against the economic downturns that can cause mutual fund investments to fall in value.

The Challenges Of Investing In Real Estate

While investing in real estate brings the potential for a large payday, it also comes with some challenges and risks.

Liquidity

Real estate is not a liquid investment. Once you invest your money in a single-family home, apartment or commercial property, you’ll have to sell that property – or the portion of it that you own – to get your money. Other investments, such as stocks and bonds, are far more liquid. It’s easy to sell stocks to get access to your money.

Starting Capital

You’ll also need more money to get started in real estate investing. Homes and commercial properties aren’t cheap. You might need to apply for mortgage loans to purchase these properties. Investing in mutual funds, CDs and stocks typically requires far less starting capital.

Time 

The profits usually don’t come quickly with real estate investments. Yes, you might charge rent to commercial or residential tenants. But often these payments only cover the cost of your mortgage payments or the other costs associated with maintaining an investment property. The big profits come when you sell the property for more than what you paid for it. To hit that goal, though, you usually must wait several years for your properties to increase in value.

Location

Location is key when investing in real estate. Your property probably won’t increase in value if it isn’t located in a community where real estate prices are on the rise. This means you’ll have to do plenty of research to find the right investment property in the right location.

Take Advantage Of Real Estate Investing

Now that you know the ups and downs of real estate investing, are you ready to buy your first investment property? Investing in commercial properties, multifamily buildings or single-family homes can bring big returns if you do the necessary research. Whether you are still wondering if you should buy a house, wondering how to buy a house or you are ready to apply and buy, investing in real estate could boost your Income.

Landlords grow rich in their sleep without working,risking or economising".~John Stuart Mill..

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

An investor without investment objectives is like a traveler without a destination.” Anonymous

“Sometimes your best investments are the ones you don’t make.” Donald Trump

“In any investment, you expect to have fun and make money.” Michael Jordan

“The rich invest in time, the poor invest in money.” Warren Buffet

Do not put all your eggs in one basket.” Warren Buffet

“If you really look closely, most overnight successes took a long time.” – Steve Jobs

We only see the success after it’s been reached. Like a tree that reaches the clouds, the roots that hold it up are invisible. They’re beneath the ground, having spent years digging through the hard ground to stabilize and feed the tree’s growth. It is also so with business

“The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left.” Robert Kiyosaki

“Earn as much as you can, save as much as you can, invest as much as you can, give as much as you can.” John Wesley

“In any investment, you expect to have fun and make money.” Michael Jordan

“Success usually comes to those who are too busy to be looking for it.” – Henry David Thoreau

Philosopher, naturalist, essayist, etc.—Thoreau knew a thing or two about productivity. He wisely saw that those who are seeking success are more likely romanticizing the idea and not doing the hard, practical work necessary to achieve it.

“The way to get started is to quit talking and begin doing.” – Walt Disney

The more business quotes from these masters of industry and history, the more you notice a common thread knitting them together. They tend to same things only in different ways. That alone should make it clear that actions speak louder than words, to use another old axiom.

Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth. – Theodore Roosevelt

Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results. – Warren Buffet

The house you looked at today and wanted to think about until tomorrow may be the same house someone looked at yesterday and will buy today. – Koki Adasi

Risk comes from not knowing what you’re doing. – Warren Buffett

Don’t wait to buy real estate, buy real estate and wait. – T. Harv Eker

Real estate practice is not about selling or buying a home. It’s about representing your client’s greatest asset to your clients greatest benefit. – Alex Delgado

Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth. – Theodore Roosevelt

A person who won’t read has no advantage over one who can’t read. – Mark Twain