Eight Benefits of Investing in Real Estate

September 11, 2014

Real estate has been proven to be one of the best vehicles to achieve wealth.  There are several ways to invest in real estate that are relatively safe.  The best part of investing in real estate is the passive return that you will receive.  If you find the right property that meets your investment needs you can cash-flow every month without lifting a finger.  Your money is now working for you as opposed to you working for money!  Once your money starts working for you it is easy to accumulate wealth.  Here are eight reasons you should invest in real estate.

 

  • Cash-Flow

When you invest in real estate you will get a great monthly cash-flow.  Not many other investments can offer that.  Real estate investing, if done properly, will NET you a sizeable chunk of change every month.  The size of the cash-flow is dependent on many factors.  For example did you buy a single family real estate investment or did you buy a vacation rental?  Read more about different types of real estate investing here.

  • Real estate outperforms other investments

When comparing real estate investing to other forms of investing, such as the stock market, real estate investing is the better place to put your money.  The return on real estate investments can vary just like every other form of investing.  If you do your homework and only purchase choice real estate investments, like the ones found here, you will be well on your way to accumulating wealth.

  • Compounding returns

Much like compounding interest real estate investments grow over time.

They can compound faster than almost every other investment if you keep reinvesting your returns.  You can learn more about how to grow your real estate investment here .  When you reinvest and buy more real estate investments with your returns you will be way ahead of the game.

  • Tangible asset

Real estate unlike most other forms of investing is a real tangible asset.

You can go out and touch your real estate if you desired.  You don’t even receive real stocks anymore if that’s how you invest.  The benefit of investing in tangible assets is that they are relatively safe.  There is always risk involved with investing but when you invest in real estate your investment is backed by the asset.

  • Income tax advantages

Real estate investing has great tax advantages.  Investing in real estate can help by providing extra deductions.  When investing in real estate you are allowed to claim various deductions such as depreciation, taxes and interest.  All of these deductions can help to lower your taxable income.  When you lower your taxable income you may be able to reduce the amount of taxes that you pay!

  • Multiple exit strategies for retirement

When holding real estate for retirement you have many different exit strategies available to you.  When you decide to retire you can do nothing and keep collecting rent as you were or you could sell all your real estate and do what you wish with the proceeds.  Another possible strategy is to owner finance the real estate you own.  There are several things you could do each with its own benefit.  I would recommend consulting with a CPA to see what method will work best for you.

  • Passive income

Real estate investing can be almost completely passive if you find and structure the investment that way.  Many people start out by buying and managing the real estate that they own and once they get enough cash flow they hire a property manager.  When buying a property I always factor in property management so that I know the investment will be profitable no matter who manages it.  You will still have to do a little work but for the most part the investment will generate passive income.

  • Wealth preservation

Because real estate investing is tied to an actual tangible asset that is very unlikely to lose value you are preserving your wealth.  Plus the money that you have is out working for you and generating cash-flow you will be less susceptible to fluctuating market values.  The asset will be tied to the cash-flow not the market.  There are various ways that real estate will help build and preserve wealth. 

 

Keep reading future blogs to learn more about real estate investing and how it can help you build wealth.

 

 

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