Real estate is a great investment for many reasons. You can enjoy an excellent rate of returns, amazing tax advantages and leverage real estate to build your wealth & also be Realtor.
Here are the top five reasons why real estate is a great investment.
Real estate provides better returns than the stock market without as much volatility
- Investing in real estate has never been easier with REITs and real estate ETFs allowing ordinary investors to get in on a variety of property types and locations.
- Investors may seek to add real estate to their portfolio as a diversifier and hedge against inflation.
- Real estate has additional benefits such as its ability to both increase in value as well as produce cash flows from rental income or mortgage interest.
- Real estate market timing is not an exact science, however there are several key indicators we use to determine where a market is in its lifecycle.
Here’s 5 reasons why you should invest in real estate in 2020:
1)Earn Passive Income For Life
The number one reason to invest in real estate is to generate a passive income for yourself so you can enjoy more of the things you want. However, not all real estate investments are created equal. Maybe you are hesitant to invest in real estate because you’re not looking for another full-time or part-time obligation. Maybe the thought of owning and maintaining an investment property on the other side of the country sounds daunting and difficult to do with your already busy schedule.
2)Mortgage Interest Rates Are Low Again
Several years back when the mortgage rates hit an all-time low, people went crazy buying homes and investment properties. Some of the same people ended up getting greedy and borrowed against their newfound equity, which eventually contributed to the downturn of the real estate market. Don’t repeat these mistakes.
3)An investment in real estate can also diversify your portfolio.
If you’ve ever spoken to a financial planner about investing, then you are very aware of the importance of diversification. When you diversify your portfolio, you spread out the risk. Real estate will always serve as a safe tangible asset to mitigate the risk in your portfolio. Many have amassed wealth by solely investing in real estate.
4)Passive income can help you become financially independent sooner
According to experts, a person is considered financially independent when they have 25 times their annual expenses saved. With this amount, they would be able to withdraw 4% of their investments each year and live comfortably without ever running out of money, assuming they earn the average return.
With passive income from real-estate investments, Sutherland says you can halve the amount you need invested to become financially independent.
He explains: “If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs.”
While returns, taxes, and inflation can, of course, affect your timeline, he says, cash-flowing real-estate is a clear asset.
5) Indulge Your Entrepreneurial Spirit
If you’ve always wanted to try your hand at owning a business, investing in real estate can help you indulge in the world of entrepreneurship. When you buy a home, fix it up and put it back on the market for a profit, or you become a landlord and rent out purchased properties, you are essentially running your own business!
There are various additional reasons why you should invest in real estate now. For anyone who is interested in building wealth and financial security through a stable investment, real estate investment is a fantastic opportunity.