There is a prominent misconception that one must be wealthy to begin investing in real estate—but the truth is that even with a small down payment, you can become a real estate investor and benefit from owning property.
Real estate investing helps you grow your portfolio and enjoy a variety of financial benefits. Whether you’re looking to get started with investing, are already investing but want to diversify your portfolio or are simply looking for cash flow, there are a number of reasons why real estate investing may be a good move for you.
Here are just a few of the reasons why real estate investing is one of the best types of investing for people of all backgrounds:
- Appreciating value: If you stick it out with your investment, you will almost certainly see appreciating value. There have been housing crashes that have occurred, but these are few and far between, and most of the time, the market rebounds. By renovating or improving the property, you can also force some appreciation, which is one reason why many people purposefully look for undervalued properties to purchase as fixer-uppers.
- The power of equity: The more equity you build in a property, the more you can leverage it for additional investments. The equity in your home is the difference between the value of your home and what you owe on the mortgage. You may be able to take out up to 80 percent of a home’s value to invest in more real estate, which allows you to increase your portfolio without having to save up for a cash down payment.
- A tangible asset: Stocks, bonds and other types of investments aren’t tangible, which can make them difficult to grasp for some investors. A home is a tangible asset. You have a piece of property you can sell if you have to move on from the investment.
- Retirement savings: Real estate is a long-term investment, and once you’re in retirement or near it, you can sell the property and use the profits from the equity you built in your home to help fund your retirement. This is especially beneficial for rental properties. You can purchase them and rent them out for enough to cover the rent and other expenses and then sell the property and have a lot of money to pocket for your retirement.
- Tax deductions: Investment in real estate makes you eligible for certain tax deductions. Most homeowners do not itemize these deductions, so they aren’t able to take advantage of their real estate savings, but when you own a property and rent it out, this is considered business ownership, meaning you have more options to take out deductions to achieve some financial benefits.
These are just a few examples of some of the biggest benefits associated with investing in real estate. Want to learn more about real estate investing and why it’s a good time to get into the game? Contact us at Valley Executives Real Estate & Property Management LLC.