The real estate market fell dramatically in 2009 and 2010 but it has been improving steadily since then. Since early 2013, property rates have increased; but it is still possible to find affordable real estate in almost every US city. However, apart from finding a home, you should consider investing in real estate to double your investment. Real estate has always been a good investment option. It increases in value and people are always willing to purchase and sell properties for personal or investment reasons.
Benefits of Investing In Real Estate
- Tax Write Offs
Buying real estate can accrue a huge amount of tax benefits. These benefits include capital gains, mortgage interest deductions and rental benefits. The most valuable tax benefit is property depreciation. The net result is that property appreciates but less than half of this value is taxable. Ideally, higher priced properties will result in lower net profitability. Until, the property is fully depreciated, the income generated on your property is not taxable. However, you will need a professional accountant to help you realize these benefits. The accountant will also help to classify you as an active investor or private investor.
- Leverage
Owning two or more properties provides an equity that you can use to buy more homes. Real estate offers the most benefits as it is a tangible asset that can easily be used for financing. Returns on real estate are much higher as compared to non-leveraged investments.
- Long Term Cash Flow
Real estate can easily be used to provide long term cash flow. For example, residential property can be leased out to private parties and the property will collect monthly rental payments. Commercial properties will gain a higher rental rate depending on the lease period. This cash flow will also increase as your mortgage financing decreases.
- Ownership
As a property owner, you now own two to three properties that will be your own. This is a huge benefit as you outright own the property and it forms a valuable legacy for future generations. It is also a form of ready cash. In case of cash requirements, you can easily sell the home and acquire cash immediately for personal requirements.
- Resale Value
As the US economy is improving, there is a very good chance that properties will double and triple in value. At the right time, owners can sell the home and cash their equity for reinvestment. This resale value is the primary reason that investors buy and flip homes.
So, Does That Mean You Should Buy Only Property?
No, real estate should form a part of your investment portfolio as diversification is the best way to make a profit. The majority will not get rich instantly by investing in property. However, if you can buy and hold properties or flip them quickly, you can make a profit. Even if you don’t want to sell, real estate can also add value to every portfolio and they can be a valuable long term investment for future generations.
