“90 percent of all millionaires become so through owning real estate.” - Andrew Carnegie

Introduction:

Investing in anything can be a risky endeavor. Real estate is a great investment being able to help you passively earn income. Not only that but with an excellent plan or partner, you will be able to build up wealth when you use your investments correctly.

7 Reasons Why Real Estate is a Great Investment!

If you are hesitant about investing in real estate, here are seven reasons why it is a good idea to do so.

1. Stable Income From Rents

Rent out your investment! One of the easy ways to invest in real estate and obtain income is by renting out the property you own to clients. Whatever the property is, be it a house, a piece of land, or a huge building, there are people out there who could use that space, whether for business or personal needs. The payment you will receive from your tenants can be quite lucrative. Renting out your property is also a good source of passive income, so you won’t have to put in a lot of work to earn a lot of money. But only if you have the right active partner or can pick the right property and property management company.

2. It Is a Tangible Asset

Tangible assets refer to resources that have a physical form. An example of tangible assets in real estate includes land, buildings, and houses. Having tangible assets is crucial because you have a physical representation of how much your investment is worth. And this provides you with more security when you partner with us. With tangible assets, you are also able to use it to provide products and services to achieve the checklist of goals or objectives you have in mind.

3. Tax Incentives

A tax incentive refers to a measure by the government to encourage a specific business or economic activity. This is done by reducing the amount of tax needed to pay. When it comes to real estate, there are tax incentives in place that will allow you to either spend more money with ease or save it, allowing you to manage your finances efficiently. Tax incentives on real estate tend to vary from one country to another. Some examples include deductions from the tax payment and are exempted from paying a certain amount. As your active investment partner, through our structuring we help maximize deductions and distribute your profits in the most efficient way.

4. Leverage

In real estate, leverage means to increase the potential return on investment using debt. One instance of this force in real estate is a mortgage. This means you can get returns on a much larger asset than just the funds you have to invest.

Let's look at a 10% increase in value. If you put $100,000 into a stock and it increases 10% you now have $110,000. But if you put that $100,000 into a $400,000 property and use a mortgage to cover the rest, when the property's value increases 10% your investment is now worth $140,000 or even if you split your property 50/50 you still double your profits by using real estate leverage.

5. Appreciation

In real estate, appreciation means an increase in the value of an asset. This can be simply by letting time go by. Even though the real estate market can experience dips, it does increase values over time, This happens because of the increase in demand for these assets. This is one of the reasons why investing in real estate is a good idea. Because as time goes by, whatever property you have spent on will increase in value, allowing you to own more income potential. Property values can also be increased by forced appreciation. This can be done through streamlining the property's highest and best use, renovating the property or improving the property or services so you can increase the rent you charge. So when it comes to spending on property, keep track of their appreciation values on your investing books to do some analysis and pick the right ones or partner with an experienced active investor. That way, you can earn a lucrative amount of money.

6. Provides Equity Buildup

Equity buildup refers to the gradual rise in a person’s equity in a property due to the monthly payments. In real estate, this can be achieved by paying the mortgage monthly, including the interest and principal. This means that whatever you invest in, how much of it that you will be able to cash out will gradually increase in time, giving you more assets to gain income with.

7. Provides Better Returns

Those financial reports of yours are going to make you happy. Investing in real estate tends to offer a better return on investment. Since most of your assets have a high value, which increases in time and is in high demand. This means that you have a massive source of income in your hands. It is a good reason why you should invest in real estate.

4 Drawbacks When Investing in Real Estate

The lucrative nature of real estate is an enticing reason to start investing. However, be aware of the possible disadvantages of getting into it.

1. Liquidity

A lot of assets and investments in business can be liquidated, meaning they can be sold for cash pretty quickly. However, the same cannot be said when it comes to real estate properties. They have low liquidity, meaning they can’t be sold in a matter of hours or days. Sales typically take a minimum of two weeks. Our own flips typically take 4-6months but we always let our investors plan for up to 12, to account for any changes or slow downs in the market.

2. Transaction Costs Are High

Whether you are buying or selling property in real estate, the transaction fees involved can be quite costly as well. The thing is, you are going to have to pay for the services given to you by real estate agents, brokers, and attorneys who earn their living by helping you in those transactions. There are also other additional costs in these transactions which you should keep in mind as well. This is one of the reasons we use mortgages to leverage our real estate investments. We also ensure that the fees and expenses are offset by the larger asset value and value increase.

3. Requires Management and Maintenance

Part of your income will be used to manage and maintain your assets. Whatever kind of property you have got, you will need to keep it well maintained to make it appealing to potential clients. To give an example, if you own a house that you rent out to maintain it, you will need to pay for cleaning services as well as cover any damages done to it. You will also need to pay someone to help you manage your property if you happen to own more than one. You use part of your income to achieve and maintain your assets. Investing as a hands-free investor means you never have to worry about finding the right resources. We use our contacts and experience to find the best maintenance, management and cleaning companies available in each of our markets.

When you want to start investing in real estate, you must know the pros and cons of it. As long as you are armed with knowledge or a great active partner, you will be able to take steps in making the right choices to make sure you can keep up in this industry. As long as you have a solid plan and get your hands on some suitable property, then it is a good idea indeed to invest in real estate.