Why Real Estate Is a Good Investment

These days when one wants to build equity and wealth there are plenty of options to choose from. From stocks to bonds to real estate there can be many decisions to make on what makes most sense to invest in. However, many people build wealth using a basic asset they own such as owning a second property. Let’s take a look at why real estate is a great investment and how it can build you wealth.

Cash flow

When you invest in real estate you can generate steady cash flow if you are renting it out. Add up your gross rent and then deduct your expenses including mortgage payments, taxes, insurance and maintenance costs.

Great returns

A long term real estate investment can have large returns. Appreciation over time has historically earned many people some significant equity. Always choose the right location of course so your property will be in high demand.

Long term security

The long term security of real estate can make it a great investment as time goes on. Also, you are not just waiting for your real estate investment to appreciate. Instead, you are renting out the property and earning money every month that you have tenants.

Tax advantages

One of the biggest advantages to owning real estate is the tax advantages. Per the IRS there are expenses you can deduct from your taxes that include things such as mortgage interest, property taxes, operating expenses, repairs and depreciation.

Leverage funds

Many investors buy their first investment property by taking out a Home Equity Line of Credit (HELOC) on their primary residence. Most lenders allow homeowners to borrow up to 80 percent of their dwelling’s worth. So they are using their equity gained rather than tapping into other financial resources. It’s a true example of having your money work for you.

Inflation protection

Real estate investing offers some great protection against inflation. Inflation raises the price of goods, but it also raises wages. Since wage growth is tied to rental prices, you can increase the rent on your rental properties once current leases expire every year.

Best of all with real estate investing, you are your own boss. While it may come with management responsibilities and the like, you are in control of your own destiny.