Real estate investing involves the purchase and use of real estate for the purpose of making money. It’s an asset with less liquidity than other investments, but it takes more investment capital to get in (which you can leverage with mortgage payments). While it’s not without its risks, real estate investing has advantages compared to other assets.
Here are some of the reasons why real estate is one of the best investments.
#1: Cash Flow
Real estate can give you more consistent cash flow in the form of monthly rental payments, which can be a powerful thing (especially if it’s passive). The best way to build wealth is to have multiple streams of income, and real estate is a great way to do that.
#2: It’s a Real Asset
There are advantages to having a real investment — something you can see, touch, and taste. And unlike investments that related to stock market (which is just a piece of paper), real estate is a real asset. a lot of the risks associated with investing has to do with volatility. And while real estate isn’t completely risk-free, it doesn’t go up and down without any control by you.
#3: Tax Advantages
Real estate has some of the most advantageous tax rules and regulations, which includes appreciation and passive losses that are passed to you as a way of offsetting any income. You can defer taxes after you sell the property, and you can use refinancing as a tax-free strategy.
#4: Recession Resistance
While it’s not recession-proof, real estate has some recession resistance. People are always going to need a place to live, and affordable properties with rents that $1,200 or less are a great way to diversify with less risk than you would with traditional investments. When everything hits the fan, real estate is a great asset class that will always hold its value.
#5: Inflation Hedge
When inflation becomes an issue, real estate is a great way to store your value. And you can pass that extra risk onto your tenants by raising their rents. Rental income can go up because of appreciation, and so does your investment value.
If you want to know more about how you can get into real estate investing, be sure to get in touch with Trevor Shakiba at Shakiba Capital.