Looking for a smart new investment to make? The housing market could be just what you need. There are many financial benefits to gain from investing in real estate, including the following.
1. Steady Income
Smart real estate investments provide a steady stream of income that’s plenty to cover your expenses and earn a profit. People always need housing, and especially if you buy property in an area with high housing demand, you can have a stable income with relatively little effort once you get your properties in suitable shape and rented out.
2. Limited Volatility
Real estate investments are less volatile than many other types. In the housing market, the longer you hold onto a property, the more your risk decreases. In the stock market, however, the risk never changes. People will always need housing, but investments in stock could disappear if a company goes under.
3. Long-Term Financial Security
Real estate is typically a long-term investment rather than a quick turnaround. When you purchase a property in a good area, you can depend on it bringing in income over an extended period. Typically, the value of your property goes up as well. Just make sure you research the housing market a house is in before you purchase it, and keep your eye on that market moving forward.
4. A Hedge Against Inflation
Inflation, the process by which the prices of goods increase as the value of money decreases, affects nearly everything, including rent and property value. One thing that doesn’t go up, though, is a fixed mortgage payment. That means that inflation can help you earn more since it increases your income but not the cost of your mortgage payment.
5. More Control
When you invest in the stock market, your fate is in the hands of the company you invested in. You don’t have control over how that company turns out. With real estate, you own the property fully, so the power is in your hands.
With real estate, you can take actions to react to the market and increase the value of your investment. If competition increases, you can put extra money into advertising, for example. You can also take on projects to upgrade aspects of your property and increase its value. These projects often feature excellent return on investment. You can expect new vinyl siding, for instance, to return 78.2 per cent of costs if you sell the property.
6. A Mortgage Getting Paid down
With rental properties, the tenants essentially pay the mortgage since rent is more than enough to cover your regular mortgage. This steady stream of income makes it easy to pay down your mortgage, which will eventually be nothing without you having to pay it out of pocket at all.
7. Tax Benefits
Housing market investments come with various tax benefits. As a real estate investor, you’re not subject to self-employment tax, and you can get tax breaks on the cash flow from your properties, mortgage payments, property taxes, operating expenses and more.
8. High Tangible Asset Value
Many investments can eventually leave you with no tangible asset value. Stocks can fall to zero and cars can break down and become nearly worthless over time. Properties, however, increases in value over time, and no matter what, you end up with a tangible asset that has value.
While the housing market has its ups and downs, the value of your property will increase over the long term. Because it will appreciate, the longer you hold onto it, the more money you’ll make. Sell at the right time, and you can earn a serious profit.
10. Portfolio Diversification
To have a healthy investment portfolio, you need to diversify. Real estate is an excellent way to do that. It’s a safe, long-term investment that will reduce the overall risks of your portfolio and help you earn returns over time.