There are numerous ways to diversify an investment portfolio, but investing in real estate remains one of the most popular. Real estate makes for a solid investment because while property value can fluctuate, the value of the land never will. You must consider getting a Real Property Reports (RPR’s) by Axiom Geomatics, this professional land surveying company will provide all important details of the land that will help you evaluate the land.
There are so many reasons to invest in real estate; some of which you may already be aware, of and others that may come as a surprise. Take a look at some of the most enticing reasons to focus on real estate investments in 2018.
1. It’s Easy to Get Started
It’s relatively easy to get started—and be successful—with real estate. If you look at the career trajectory of a successful real estate investor like Than Merrill on LinkedIn you will see that you don’t need a specific background to begin investing, and when you purchase a property, value increases. This makes it easier to afford supplemental properties down the line.
2. High Tangible Asset Value
Unlike stocks and bonds, land always holds its value. While property value may fluctuate depending on the market, the value of your land will continue to appreciate. According to the National Association of Realtors, real estate appreciation levels have held steady at 6 percent per year since 1968. There’s only so much land available—new plots can’t be created. With the world’s population increasing every year, the demand for housing continues to rise. Because the land is a limited resource, long-term appreciation can ensure your investment is a strong one. The proof is in the pudding; again and again, the housing market has recovered from past bubbles that caused home appreciation to slip. Investors who hang onto their real estate investments during recessions can expect the value to return back to normal within a certain number of years.
3. A Plethora of Financing Options
When purchasing traditional investment vehicles, like stocks or bonds, you’ll need the money upfront. Real estate investments provide a bit more flexibility when it comes to funding. There are plenty of ways to finance a real estate purchase: cash, traditional mortgage loans, angel investors, and residential hard money loans. With so many options available, you can choose the method that suits your financial situation best. For example, in saturated markets, you may need to procure money sooner—private lending will provide that. In less competitive markets, conventional loans might be easier to use.
4. Tax Benefits
Investing in real estate constitutes running a business, which entitles you as an investor to numerous tax exemptions and benefits. There are numerous tax benefits available for a real estate investment. Take advantage of tax deductions on rental income, mortgage interest, management expenses, operating costs, insurance expenses, property taxes, and depreciation.
5. Steady Monthly Income
If you use your real estate investment as a rental business, you can rely on a passive monthly income. If you land yourself some high-quality tenants, you can anticipate a steady flow of cash for years. These rental payments can help you pay off your mortgage, and help you set up a robust retirement plan for your future.
The leverage offered by your real estate can increase your overall returns; for example, you can use $200,000 in leverage assets to purchase four properties with down payments, instead of purchasing one for $200,000 in cash. While all leverage is inherently risky, a savvy investor that understands how leverage impacts a real estate deal can profit significantly.
6. Competitive Risk-Adjusted Returns
Risk-adjusted return measures how much risk is involved in producing a particular return. Real estate investments are less volatile than traditional investments like stocks and bonds, meaning they’re not as likely to shift unpredictably. Because the market remains consistent, investors can take advantage of stable costs and relatively smooth returns.
There are many reasons to invest in real estate, and if any of the above reasons ring true for your current financial goals, it might be time to start considering your investment opportunities. Make note of the benefits of real estate investing and set yourself up for long-term financial success.