Real Estate as Part of Your Investment Strategy
Franklin D. Roosevelt said it best. “ Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
Real estate investing has been a popular investment strategy for generations, and for good reason. Real estate can be a valuable addition to your portfolio with the potential for steady cash flow, appreciation, and tax benefits. Here are a few things worth considering or researching.
Steady Cash Flow
One of the biggest advantages of real estate investing is the potential for steady cash flow. If you purchase a rental property, monthly rental income can provide a steady source of passive income. Even if you start this journey and the rent is simply covering the mortgage, this can change over time and become income-producing. There is huge value in the monthly rent just paying the mortgage as effectively someone, your tenant, is depositing into a savings account on your behalf as they pay the mortgage down while the property value increases. Steady cash flow could be valuable in retirement when you may no longer have a steady paycheck. Additionally, rental income can help offset the cost of mortgage payments, taxes, and other expenses associated with owning a property.
Appreciation Gains From Real Estate Investments
Another huge advantage of real estate investing is the potential for appreciation. Over time, the value of your property can increase, providing a potential source of capital appreciation. Equity gains can be attractive in a rising real estate market, where property values are increasing rapidly. Gradual increases in value are also good on the investment front. Additionally, the equity you build in your property can be used as a source of funding for future investments or to secure a line of credit.
Tax Benefits
Real estate investing also offers a range of tax benefits as well. For example, mortgage interest, property taxes, and depreciation can all be tax-deductible. This can help to reduce your taxable income. Additionally, if you sell your property for a profit, you may be eligible for a lower tax rate on your capital gains depending upon when you sell and what you do with the profit earned.
Diversification
Real estate investing can also help to diversify your investment portfolio. Diversification is a sound investment strategy. By owning real estate, you can spread your risk across multiple assets, reducing your overall exposure in any one investment. This can help to reduce the impact of market volatility on your portfolio. It can provide a more stable investment experience.
Where to Begin
We absolutely believe in real estate as a part of your investment strategy. We have a slew of professional advisors, planners, 1031 exchange companies, and accountants that we can pull in to answer any of your questions beyond what to purchase and where. Interested in beginning your property search, click here. To learn more about buying in our market with our team, click here.
