If you’re looking to expand your portfolio or become a real estate investor, our latest blog can help. Learn more about why now is the time to invest in real estate!
If you’re on the fence about investing, these reasons why you should invest in real estate now may change your mind! Real estate can build wealth and offer a powerful return on investment if done correctly. Don’t wait any longer to take that first step to becoming an investor!
Investing in property can be a fantastic way to decrease your tax liability at the end of the year. When you operate your investment ownership as though it were a business, you’ll be able to deduct many of the common expenses related to managing and maintaining your property.
Property taxes, travel fees, and repair costs can all potentially be written off. You can also avoid capital gains taxes altogether with a 1031 exchange which allows you to purchase a like-kind property with the proceeds of the sale on the original investment. Doing this defers your taxes until the property is sold. You can also defer capital gains taxes by purchasing properties in an “Opportunity Zone” designated by The Tax Cuts and Jobs Act of 2017.
Your investment will help you achieve bigger profits. A skilled investor will learn how to use their equity correctly in order to buy more properties and, as a result, generate even more wealth. When investors are working on deals, they like using other people’s money for a significant reason. Let’s take a look at an example.
Say you spend $50k of your own money on an investment property outright. If you invest in a property that appreciates at 5%, your net worth from the property will only be $52,500 after one year. However, if you took out a loan and bought a leveraged property for $200k with the same appreciation rate, it would leave you with a much higher net worth of $210k from just that one property. You can see how using leverage can have significant advantages for building wealth through real estate investing, especially in the long term. Getting started with this strategy early on will help ensure better results down the road.
As an investor, you should know that diversity is key to growth. While stocks and real estate are popular choices for many people, it’s also smart to mix up the types of real estate you’re investing in. Consider not just commercial properties, but also single and multi-family properties, land, and even mobile homes!
While every type of property investment has its own set of pros and cons, don’t be discouraged from trying new things. By taking risks, you open yourself up to a world of possibilities. Additionally, by diversifying the types of real estate you invest in, you create stability for yourself should the market ever shift.
Everyone wants to retire early, or at least have the money saved up by the time they make the decision to. By investing in real estate, you can make additional passive income on top of what you’re already earning.
With enough investment properties, you could eventually say goodbye to your 9-to-5 job. Getting there may take some time and effort, but investing in real estate is one of the best ways to generate additional income for yourself and your family. The typical 9-5 can’t provide for people who want more from life. By investing in a diverse portfolio, you can create the income you need to live your dream life.
Hedge Against Inflation
Inflation isn’t something that only affects groceries and gas prices—it can have a disastrous effect on investments as well. To keep your portfolio growing, consider investing in commercial real estate. While there are fewer businesses than potential homeowners, commercial tenants tend to be better at following contracts, upkeep, and generally being good renters. Definitely consider having one or more commercial properties in your portfolio.
Although other investments may waver, you can count on real estate to bring in the returns you need. Real estate investing has been profitable time and time again with appreciation year after year.
Do your homework before buying any property. Learn everything you can about sale history and local construction projects, and check for liens or other title issues. Also, make sure there are no problems with the land itself. By investing in high-quality real estate that is free of negative marks, you’ll be setting yourself up for success later on down the road.
If you’re ready to invest in real estate, contact us today! We would be happy to help get you started.