Apart from putting all your hard-earned money in a savings account, many financially-savvy individuals are always on the lookout for the best avenues in which they could invest. It’s natural to want to strive for financial security and grow your money. This can lead to many individuals looking for passive income opportunities.
Passive income works just like your savings does, except that your money is in another investment form and not in the bank. One of the most promising choices in which you could invest is real estate. This refers to residential homes, commercial buildings, or rental property. As you invest in these properties, you can watch your income grow.
As a start, here is a great guide on residential real estate investing that you can study first. To convince you further, here are some of the best reasons why you should start investing in real estate today:
1. It Allows You To Enjoy High Returns
When you have some extra money on hand, you may constantly be searching for the best ways to get your money to gain high returns. If you currently hold a day job, you might prefer a passive means of earning income through real estate investment. Even as you sleep, your property will continue to earn, and all you have to do is enjoy it. As of 2018, the National Council of Real Estate Fiduciaries found that private commercial market real estate made a return of at least 9.85% over the past years. This percentage is quite substantial when compared to other means of investing, such as through a traditional savings account, which can only give you around 1% to 3% of returns per year.
2. It Gives You A Steady Cash Flow
This section applies to those who are keen on choosing rental properties for their investment. Or you may purchase a residential house or property, and convert it into separate sections that can be rented out. Whether the lease plan for your tenants is long-term or short-term, one thing is for sure: you are going to enjoy a steady cash flow into your account.
This steady cash flow helps make sure that you are still going to enjoy a monthly income stream. Hence, no matter what happens to the current job that you hold, you know that you are going to be okay. In other instances, too, it may also be the case that you have long been dreaming of having more freedom with your time. Perhaps your full-time job is eating up too much of your time that you tend to forget and neglect your family, or you are also exhausted at the end of the day. With real property investments, you have many ways to earn a steady income.
3. It Allows You To Enjoy Tax Benefits
When speaking of tax benefits, these can generally differ depending on the state you’re from. Typically, governments often reward rental property owners with tax benefits. For instance, rental property owners get to enjoy lesser tax than other forms of earning an income, as whatever income you may receive from rentals isn’t subjected to self-employment tax. Other tax exemptions that you may enjoy also include:
Lower tax rates for long-term profits
Better depreciation adjustments
To be a hundred percent certain, though, always double check with your local laws.
4. It Appreciates In Value
This is one of the most well-known advantages of investing in real estate. Among all the assets that you can ever own, real estate properties are those with the most growth. You get to enjoy better appreciation, as real estate is always increasing in value. Hence, even if you do not do anything with your property at the moment, or if you also use it for personal purposes, you can still earn from it in the future should you one day decide to sell your property.
5. It Gives You High Rental Amounts
High rental amounts are beneficial for you as the owner of the rental property. While it may not be the case for your tenants, this is still something that you can enjoy since you are the one who made an investment in the real property. After all, for the first few years, you will also have to take back first whatever it is that you spent to purchase the property. If the prices of commodities are always increasing, you can be sure that rent can increase, too. Hence, you can fairly increase your rental amount in relation with inflation. This means even more income for you as the property owner.
With these reasons and so many more, it is generally safe to say that the choice to invest in real estate is a good one. Real estate is a long-term investment with a value that increases over time. If you are looking for a stable investment that can also be one of the best assets that you can own and pass down through generations, real estate is the best one for you to purchase. As many have used real estate to build their wealth, you can accomplish that for yourself as well.