If you are wondering what is the best way to invest money, then we will say real estate. However, why invest in real estate and not any other investment strategy? Keep reading to find out.
#1.Why Invest in Real Estate: Easy Entry
In order for you to become a real estate investor, you won’t need much. The best thing about real estate is the easy entry. In other words, you do not need to obtain a degree in real estate investing to start. Simply, you can start learning from all the real estate resources available to you. One great way is to read real estate books and real estate websites. These are often a reflection of other investors’ experiences. Therefore, you get to learn so much in almost no time.
Moreover, these resources will teach you all about how to invest money wisely and, most importantly, where to invest money. When you have enough background information, it gets easier to make such decisions based on others’ experiences.
#2. Why Invest in Real Estate: Making Money in Real Estate
The ultimate reason for a person to invest their money is to make money, obviously. Investing in real estate, however, has shown to be one of the best ways to do so. Many real estate investors were able to make millions of dollars out of real estate properties. But, you should keep in mind that in order to get to that level of financial independence you should plan your business well.
#3. Why Invest in Real Estate: The Variety of Investment Strategies
Not only is making money the best part of real estate investing but also the variety of ways you can achieve that. Investing in real estate comes in many different forms which leave the choice for you to decide how to invest. For beginner real estate investors, there are low-risk investments that are a great way to start. For example, investing in rental properties is the best investment strategy for beginners. This strategy ensures a steady rental income for as long as the property is rented.
As you progress, there are other investment strategies that involve higher risks, yet higher returns. An example of that type of real estate investment strategies is the real estate wholesaling strategy. So many real estate investors were able to accumulate a fortune from this strategy alone. However, it takes more than knowledge in the real estate business. That is the reason we do not recommend such strategies to a new real estate investor.
Related: Real Estate Investing: Airbnb Investments vs. Traditional Investments
#4. Why Invest in Real Estate: Low-risk Investments
The risk is the point where many people stop themselves from getting into a business. However, real estate investing offers investors a wide variety of investment strategies that come with low risk. Investing in rental properties is, maybe, one of the lowest-risk investments, especially for new investors. Therefore, you will not have to worry about being restricted to one form of investment.
However, one thing you should know for sure; the greater the risk, the greater the reward. Still, this should not stop you from taking a step toward your financial independence. Whatever investment strategy you choose, make sure you calculate the risk property. The rest will come naturally as you engage more in the business.
#5. Why Invest in Real Estate: Diversification
Diversification in real estate is simply the distribution of risk on the investment properties you have. When one property is in bad shape (performance-wise), other investment properties will make up for your loss. Therefore, real estate offers you a chance to diversify your investment portfolio.
#6. Why Invest in Real Estate: Tax Advantages
Every investor’s favorite part in real estate investing is the tax advantages that apply to real estate properties. These advantages come in the form of deductions applicable to many of the property expenses. These expenses include negative cash flow, closing costs, and any losses a property experiences.
#7. Why Invest in Real Estate: Flexibility of Time Commitment
Another reason we say that real estate is one of the best ways to invest money is time flexibility. As many people work 9-5 jobs, they think that they do not have the time to make an extra income. However, real estate has a variety of investment strategies that do not require a time commitment. One of these strategies is passive income investing. Essentially, it is when you put your money towards an investment property that generates an income while others take care of it. The most common examples of such investments are turnkey investments as well as REITs.
Moreover, if you wish to buy a rental property, you can turn it into a passive investment easily. All you have got to do is hire a real estate management company. These companies assign professionals to take care of your property’s daily operations. This means that you can engage in passive investing even when you have your own career.
Related: Part-Time vs. Full-Time Real Estate Investor: Which Real Estate Investment Strategies to Go for?
#8. Why Invest in Real Estate: The Myriad of Investment Property Financing Options
In real estate, not only do you have a variety of the best investment options but also a variety of investment property financing options. A mortgage might be one of the most common and convenient options for real estate investors. However, if you do not qualify, then do not panic. You have other choices that you can go with. One of the financing options you have is hard money lending. This strategy is best for short-term investments, though, due to the short-term lending policy. Still, there are other strategies such as owner-financing and private money lending. To learn more on this matter, check out “Learn About the Myriad of Investment Property Financing Strategies.”
#9. Why Invest in Real Estate: Appreciation
When it comes to profit and gains, real estate comes at the top of the list. Real estate investment properties tend to appreciate annually on a steady basis. This means that while you are holding on to your investment property, it will be rising in value. By the time you sell it, you will be able to sell it for far higher than the original price at the time you purchased it.
Related: Real Estate Investing for Positive Cash Flow vs. Appreciation
#10: Why Invest in Real Estate: Equity
Another great benefit of real estate investing is equity. Every mortgage payment you make means that you are building equity over the property. Considering the fact your tenants are the ones paying for it, it is a great way to invest your money!
#11. Why Invest in Real Estate: Capital Leverage
When you have $100,000 on hand, why buy one property when you can buy multiple?! Well, if you are wondering how is that possible, then easy! With $100,000 on hand, you can actually buy multiple properties by putting only the down payment while a mortgage will cover the rest of it. This allows you to expand your real estate portfolio as well as diversify it in order to mitigate the risks.
A simple comparison between real estate investing and investing in stocks: when you invest in stocks, you will have to have the money all in cash. Moreover, you only have stocks to invest in, meaning that there aren’t any other options or strategies. On the other hand, when you invest in real estate properties, you can buy multiple properties, cover the rest with a mortgage, rent them out and let tenants pay the mortgage dues.
Now that you know all the reasons for why invest in real estate, make sure to check out Mashvisor to learn all about how to start a real estate business by clicking here!