Mother’s Day is a special day that shouldn’t be dismissed by those in the real estate investing industry. These days, there’s a lot of great conversation happening about empowering women to invest in real estate. You see, while there are many female real estate agents, there are relatively few females who invest in property. In fact, only 29% of women see themselves as investors, according to a 2018 study by Fidelity Investments. However, by keeping their money in savings accounts rather than investing it, women are missing out on substantial opportunities to build wealth for themselves and their families. Here are 10 reasons why a new investment property is the best gift for this Mother’s Day.
#1 Passive Rental Income
There are many benefits to investing in real estate, the first of which is the ability to make passive rental income that is nearly tax-free. A rental property essentially works for you even when you’re sleeping. You can use the rental income to pay for expenses like mortgage payments, running costs, and property taxes – without having to spend all of your time at work! Mothers can also spend this extra cash on what they enjoy and for their families. For example, you can save that rental income over the years for your children’s college education or as a down payment for their future home.
#2 Tax Advantages
Another reason why you should invest in property is that it can provide you with tax benefits through depreciation. In addition, property taxes, mortgage interest, repairs, maintenance and improvements on the investment property are generally deductible on a second home. You might also be able to take advantage of the 1031 exchange which allows you to delay paying taxes on the sale of your rental property when you reinvest the gains in another property. All of these tax benefits can help real estate investors increase their rate of return on investment.
#3 Early Retirement
Early retirement sounds like an unreachable fantasy to most people. Yet, there are many stories about people retiring comfortably at the age of 40. No, they’re not just lucky – they’re real estate investors! Among the many benefits of owning a rental property is that it provides cash flow for early retirement. This means that, when done right, real estate investing is a stable way to increase wealth over a period of time and then supplement your retirement years with income from your rental properties.
#4 Long-Term Profits
Unlike stock investments, real estate investments can never go down to zero, even during a difficult time. This is because real estate properties are not as sensitive to market fluctuations. Besides, when you invest in property, your investment will most likely go up in value. This is known as appreciation. Basically, the value of a rental property will almost always go up the longer you hold it, giving you the ability to sell it in the future for a profit and a good ROI. This makes real estate a stable and safe investment for building wealth over the long-term.
Note: You can use Mashvisor’s Investment Property Calculator to get readily calculated data on what ROI to expect from investing in property over the medium and long-term. Click here to start!
#5 Easy to Finance and Leverage
One misconception about real estate investing is that you need to have a lot of money to get started. This is why most women are hesitant to invest in property. However, this is not the case in reality. There are many options of investment property financing offered to beginner real estate investors. Besides a conventional mortgage loan, there are hard money loans, private money loans, seller financing, and more. As you pay off your debt, you build equity which gives you leverage to buy more properties to make more money in real estate. There are even ways to buy an investment property with no money! You won’t find this ease in financing when investing in stocks or bonds.
Here are 10 Different Ways to Purchase a Property with No Money Down
#6 Hedge Against Inflation
While most people fear inflation, this is not the case for a real estate investor as investing in property is an excellent hedge against inflation. As the cost of living goes up, so does the rental income and cash flow you get as a landlord or rental property investor. Moreover, if you’re planning on selling your investment property during times of inflation, you can list it for a higher price and reap profits, especially in real estate markets with a low supply of investment properties. This means that property investors are protected against the effects of inflation.
#7 Helping the Community
While most real estate investors focus on their returns, a unique advantage of investing in property is the impact on the community. As a rental property investor, you’ll provide a home for someone. If you choose to invest in property as a fix-and-flip, you’ll also be helping the local community by hiring local contractors, improving available housing, maintaining properties, and increasing the local tax revenues. This will directly impact the community and improve the lives of people living there. Investing in real estate allows you to build wealth for your family while leaving a positive impact on the community.
#8 Variety of Opportunities
When we say investing in real estate, we don’t just mean buying a house and renting it out. There are numerous investment strategies to make money in real estate investing. For example, when it comes to rentals, you can either rent out traditionally to long-term tenants or on Airbnb to short-term guests. If you don’t want to be a landlord, you can invest in property by flipping it – buying a house to renovate and sell for profits. You can also choose to invest with a partner, a real estate company, or a REIT. These options are great ways to get into real estate if you don’t have sufficient experience.
For more details, read: The Best Rental Real Estate Strategies for Beginners
#9 Real Estate Offers Flexibility
With the numerous investment strategies comes another benefit of getting into real estate investing – flexibility. This means many things. First, you can build a real estate portfolio of diverse strategies. For example, you can invest in a REIT and save the profits as a down payment for your first rental property investment. In addition, a real estate investor can hire a property management company to handle the work that comes with owning a rental property. This offers the flexibility of setting your own schedule as you’re not tied to the property. Finally, investing in property doesn’t have a salary cap, so your earning potential can be limitless!
#10 High Return on Investment
And that leads us to the final benefit and reason why you should start real estate investing in 2019. It’s known that many millionaires have acquired their wealth from the real estate industry. Profits made from investment properties can outpace other investments mainly because you don’t have to invest all of your money. For example, if you want to invest $100,000 in stocks, you’d have to put in the full $100,000. On the other hand, if you wanted to invest in property for $100,000, you could pay a down payment of only $25,000. The bank will finance 80% of the investment while you get to keep 100% of the profits!
Then, let’s say that you were to sell that property after 10 years and that it had appreciated an average of 3%. This means you can sell it for over $240,000, nearly 10 times your original $25,000 investment! Depending on other factors like the location of the rental property, your rate of return on the real estate investment would be significantly high.
Related: How to Calculate the Rate of Return on a Rental Property
The Bottom Line
Everyone should own at least one piece of real estate. These are the main reasons why the best gift this Mother’s Day is to help her invest in property. If you are a mother yourself, we advise you to stop wasting time and start investing! If you’re hesitant to start, all you need is some real estate education to give yourself the push to take action. You can learn all about the different aspects associated with the real estate business in our investment blog. Once you have the confidence to start, use our Property Finder to find the best properties that match your criteria in a matter of minutes.