Investing in real estate is a popular way of creating wealth. Some investors prefer to buy a property and hold on to it until its value appreciates. Others prefer to purchase a property, improve it and resell it for a profit in a short period of time. Regardless of the techniques, real estate investment has a number of benefits.
Real estate provides an investor with a relatively low risk product. Although real estate values cycle, over the long term values continue to increase which makes investing in real estate a low risk investment option.
Real estate values will likely increase as improvements are made to a property. Values will also increase as the economy increases. These are tremendous advantages to real estate investors to know that their investment will usually be increasing.
Using other people’s money to make money for yourself is called leverage. Real estate investing is one of few investments that provides leverage opportunities. How likely would it be for a lender to loan money to someone who wanted to invest in the stock market?
Tax Free Cash Flow
If an investor has rental income, it should provide a positive cash flow after expenses. This cash flow is partially or fully tax free due to depreciation that can be claimed against the income. No other investment offers tax free cash flow.
As you can see, there are many advantages to investing in real estate. It can provide an investor with good returns but it is important to make careful choices and weigh your options before beginning. Of course, consulting a Realtor who has experience with real estate investing can be invaluable!