Real estate has long been considered a solid investment for many reasons. It is a relatively safe and easy way for people to build wealth, beginning with a small amount of money. Interested in investing in real estate? I’d be happy to help you get started! Here are 7 Reasons to Invest in Real Estate.

Here are some ways investing in property can help you build an investment portfolio.

Cash Flow – Reason to Invest In Real Estate

Real estate investments can provide you with a reliable and steady cash flow. Investing in rental properties is relatively easy as expenses are predictable, and if your properties remain occupied, you know what to expect in terms of profit margin.

Appreciation – Reason to Invest In Real Estate

Real estate appreciates in value. Real estate consistently appreciates, even during economic downturns, making it one of the more reliable investments. On average, real estate in the US appreciates between 3-5% annually.

Retirement – Reason to Invest In Real Estate

Real estate investments help you retire. Paying each property’s mortgage throughout the years you work, you should experience greater cash flow as you near the end of your mortgage term and the principal is paid off. Without the mortgage payment during retirement you should be able to supplement your previous income with cash flow!

Capital Gains Taxes – Reason to Invest In Real Estate

There are tools to defer Real estate capital gains taxes. Under the 1031 exchange tax code, you can invest the gains from the sale of one property to the purchase of another property without paying taxes on the gains.

Outside of these tools, real estate sales are taxed lower than other income. When you sell your property, you are taxed short- or long-term capital gains which are usually lower than income tax brackets.

Leverage – Reason to Invest In Real Estate

One of the most attractive reasons for investing in real estate is leveraging your money. When you take out a mortgage to purchase property, you reduce the amount of capital required. As you build up equity in the property, you borrow against the equity or refinance the original loan, freeing up cash to buy another property.

Control of Property – Reason to Invest In Real Estate

You have control to improve upon your asset. Unlike an investment in stock, where you have no control over how it performs, you can improve upon your real estate investment. Updating or upgrading systems, finishes, appliances, and landscaping helps build value in your investment.

Depreciation – Reason to Invest In Real Estate

Real estate investments are depreciable. This is confusing, but you can legally claim a depreciation expense on an investment property even though the value of your investment property is actually appreciating. The depreciation deduction allows investors to generate a higher cash flow while reporting a lower income for tax purposes.

These are just 7 Reasons to Invest in Real Estate. There are many more! To ensure you maximize these benefits, I recommend working with knowledgeable experts, including real estate agents, lenders, accountants, attorneys, and many more.

If you have additional question, lets connect!