5 Money: Ten reasons to invest in Real Estate.

You are looking at the various investment options, and someone suggested real estate. Hmm….why real estate.

Real estate allows you to grow your portfolio, diversify your investments, and enjoy cash flow and capital gains; you should invest in real estate.

10 Reasons to Invest In Real Estate

1. It’s a Tangible Asset

When you invest in intangible assets like stocks or bonds, all you have is a piece of paper to show for your money. You are not the owner of anything. Your piece of paper could be worthless if the stock market crashes.You have a physical asset if you invest in real estate. Values may rise and fall over time, and there's no guarantee that they won't, but actual goods are worth something. If you need to get out of the venture, you still have a piece of property to sell.

2. Property Values Typically Appreciate

If you put money into a house for a long time, it will appreciate. Things like the housing crisis of 2008 do happen, but they aren't common. The majority of the time, buildings and land rise in value, making your investment worth more than you paid for it.You might also make the home appreciate by upgrading or improving it. You can enhance the value of a home faster than natural appreciation happens, providing you a higher return on your investment, whether you buy an inexpensive property and fix it up to sell or renovate a rental property.

3. You Have the Ability to Leverage Your Assets

You can use the equity you build up as you pay down your mortgage and improve the property to increase its worth to expand your assets. The difference between the value of your home and the amount you owe on your mortgage is your equity. Any difference is profit for you.You won't be able to use all of the equity if you keep the house, but you could be able to take out up to 80% of the value and use the rest to invest in new real estate. This is an excellent method to expand your portfolio without having to wait until you have enough money saved for a 20% to 30% down payment on a new property.

4. Cash Flow from Real Estate

You can rent out a buy-and-hold home and receive monthly cash flow if you invest in it. The majority of investments do not generate cash flow. They may, at the absolute least, pay dividends, but you only get them quarterly or seldom annually.

5. Tax Deductions Eligibility

When you reside in investment real estate, you get relatively few tax deductions. Because most homeowners do not itemize their deductions, they are unable to benefit from real estate savings. In most circumstances, you can only deduct your property taxes and mortgage interest if you itemize your deductions.

You own a business rather than just an investment when you acquire and hold real estate and rent it out. Many deductions are available to you through the IRS, just as they would be if you ran a physical store. Any costs you expend to maintain the property, handle business, or even conduct business (such as purchasing a laptop or going to the property) can be deducted from your taxes. This lowers your tax bill and saves you money.

6. Excellent Retirement Savings Strategy

It is not liquid to invest in real estate. You make a long-term investment in it. As time goes on, you accumulate more equity in your property. When you reach or approach retirement, you can sell the property and use the proceeds to fund your retirement.

7. You Have a Lot of Choices

Real estate can be purchased in a variety of ways. Many people acquire and hold real estate because it generates a steady monthly income and allows them to save for their future aspirations.

You may love fixing and flipping if you are a fixer-upper type of person. Finding undervalued properties, rehabilitating them, and selling them are all part of this process. This normally happens within six months, so there aren't many ongoing expenses. Then you can go back and buy another home, repeating the process as needed until you meet your profits objective.

8. Investing in real estate does not require a large sum of money.

Many individuals believe that purchasing investment real estate requires a large number of money. You don't have it.

When you use standard financing, you just need to put down 20% to 30% of the sales price on the home. You can also buy in stages, such as buying the land initially and then building later. As the value of your house rises, you will get a greater return on your investment.

9. You can profit from inflation hedging.

Although inflation affects all investments, real estate is almost always in demand, therefore its economic power is typically maintained. Normal inflation raises the cost of producing goods and services for businesses. They must either increase their prices or accept a lower profit margin. Real estate is a natural inflation hedge because it is not significantly correlated with stocks or business profits. In many cases, you can pass on inflation charges to your tenants.

10. As an investor, you can claim depreciation.

Although real estate often gains, buildings depreciate over time, allowing investors to claim a non-cash depreciation charge on their taxes. Residential rental property has a useful life of 27.5 years, according to the Tax Agency. In terms of numbers, this means that you can calculate your yearly depreciation by dividing your cost by 27.5. Commercial real estate has a 39-year depreciation period. Make careful to factor in the price or value of the land when calculating your costs. Land does not deteriorate in the same way that structures do.