Why You Should Invest in Real Estate
Wednesday, March 21, 2018, 6:00 AM | Leave Comment
Long gone are the days when people invested all their money in shares and other intangible assets.
Investors are now more informed on the importance of portfolio diversification in reducing the risk of making huge losses. This is one of the reasons why more people are investing in real estate today, and so should you.
After the 2008 economic crisis, many investors were averse to investing in real estate because of the risks and uncertainties involved, but that is no longer the case before.
The global real estate market has stabilized and it is now one of the most lucrative investments you can make.
Below are some of the reasons why this is so.
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Passive income
This is perhaps the main reason why real estate is such a great investment option. With a real estate investment, you are guaranteed of a regular income that is passive as long as your property is occupied.
Unlike most other investment alternatives, the cash flow is stable as you will have a contract with your tenant.
The cash flow will not be affected by market volatility and other such factors which greatly affect share prices and other types of investments.
Since the income is passive, you can focus on your fulltime job, or build a business, or even choose to travel the world with your proceeds.
Alternatively, you can invest in more properties and build your wealth.
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Tax benefits
Rental income is taxed at a lower rate than other types of income and you will therefore be able to retain a higher percentage of your income. This explains why $100,000 earned from a rental property is more valuable than $100,000 earned from employment.
Additionally, you will be taxed on the rent you receive less depreciation and other expenses such as maintenance, making your tax payments lower.
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Control over your investment
When you invest in shares, the destiny of your investment is in the hands of the directors of the company. You have absolutely no control over your investment.
Therefore, if you are a hands-on type of person, stocks may not be your ideal investment option.
With a real estate investment, you alone are in control over your investment. If you want to increase its value, you can make some changes to the property so that is can fetch just the amount of income you need.
You can market your property as you wish and it is just great to have this level of control over your investment.
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Portfolio diversification
This means investing in assets that have a low or negative correlation with each other in order to reduce chances of making huge losses and lower the volatility of an investor’s portfolio.
Since real estate has a low correlation with most other investment options, it is a great way to diversify one’s portfolio.
It is clear that investing in real estate is one of the best investment decisions you could ever make. You just need to ensure you work with good realtors, such as Real Pro Realtors Florida, in order to identify the best properties to invest in and make the most out of your investment.
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