Diversifying your portfolio for investment is important. Putting all the eggs in one basket can make you suffer losses within a blink of an eye.
However, when investing some cash in the stock market, other funds in EFTs or bonds, and some in the real estate market, you will have fewer losses and higher chances of earning more.
Most individuals avoid investing in real estate since they believe that they need a huge sum of cash to invest. But to reassure you that real estate investment is a good option, look at the following reason:
- Many Financing Options
Real estate is among the preferred methods of making an investment. Not just because it offers good returns, it is also because it cushions investors against inflation.
There are many financing options you can pick from in today’s financial market. Operating on a cash basis is impractical for many individuals, and most investors believe that splitting cash among different properties will yield more than 50% revenue return.
Among the popular financing options, you can consider to fund your real estate investment is a hard money loan. Basically, hard money loans will allow you to turn quick profits by rehabbing or flipping lucrative properties.
- They’re Tangible Assets
When investing in an intangible asset, such as bonds or stocks, all you need to show for the investment is just a piece of paper. You won’t own anything, and when the stock market tumbles, that piece of paper can be worth nothing.
Investing in real estate properties means you will have tangible assets. Values can decrease and increase throughout the years. Although there are no guarantees that they will fall, tangible assets are basically worth something. And when the market crashes, you will at least have something to sell.
- Property Value Will be in Your Hands
Among the best things about investing in real estate is that it is possible to improve the property’s value. This can be achievable by improving the property with a bath/updated kitchen or adding amenities, such as a swimming pool. Plus, you may choose to either sell or rent it out.
Because real estate properties are tangible assets, all the improvements you consider making in the property will improve its value. Some of the things that can also bring a big return include deck additions, kitchen remodels and replacing the garage door.
- Tax Benefits
A tax deduction on investing in real estate properties may reduce taxes and offset income. There are no self-employment taxes on the rental income.
At the same time, governments provide tax breaks for every repair expense, insurance, property depreciation, and legal fee.
As a real estate investor, you will get a lower tax rate for a long-term investment. Plus, reasonable costs of managing, operating, and owning properties will be deductible.
Although real estate investments take long to complete transactions, even with a professional broker’s help, investing in real estate is basically a unique class that is easy to understand and may improve the return profile of investors’ portfolios. Plus, real estate can improve your investment portfolio by reducing volatility through diversification.
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