If you want to maximize your profits while diversifying your portfolio, investing in real estate is the best way. Some people even claim that, when done correctly, real estate investing can be the highest-earning asset on your portfolio.
Diversifying your portfolio is crucial. Keeping all your valuables in one bag has a higher risk of losing everything in an instant than when you divide them into multiple bags. Investing in bonds, the stock market, or real estate can boost your profits while significantly reducing losses.
People are often uncertain of investing in real estate as they believe it’s highly risky and demands a large sum of money. This is not the case. Here are a few compelling reasons why real estate is one of the best investment opportunities in today’s time.
It’s One of the Most Secure Investments Available
It has the minimum risk compared to other investment options, as your investment is secured in the form of a property. You will never lose your entire investment; there’s always some sort of security with you.
Unlike stocks and fiat currencies like the dollar, real estate does not lose its value over time due to inflation. In fact, it performs better. Even in crashing markets, smart investors can do well by buying value-add assets, just like how many investors survived 2008’s housing bubble burst.
You’ll Save Money on Taxes
Real estate investments offer numerous tax benefits to people. Buying a property and renting it out is also a kind of business.
Here are a few expenses you can earn tax breaks on:
- The amount of mortgage interest on the loan
- The payment of origination points of the loan
- Maintenance Cost
- HOA dues, homeowners insurance, and property taxes
If you invest in bonds or stocks, you can only deduct capital losses you incur when selling the property for less than the buying price.
You Can Force Appreciate Your Properties to Maximize Profits
When it comes to real estate investing, your asset might appreciate not only organically with the market, but you can also force it. Let’s put it this way. When the real estate market performs better, your property prices tend to increase. This is known as natural appreciation, or going with the market flow.
The revenue produced from the money you put in is known as forced appreciation. For example, adding new and modern windows, sprucing up your backyard, or making your property energy efficient will all cause the value of your property to rise significantly.
Have you recently had your interiors renovated? This could also boost your selling price. There are several things you can do to force your property to appreciate, making real estate more profitable.
Real Estate Investing Is Not Limited to Renting and Buying
If buying and renting out real estate is too much for you to handle, there are several other ways you can invest in real estate.
- Purchase an undervalued property, renovate it, and sell it at a reasonable price, earning profits.
- Work as an intermediary between purchasers and motivated vendors.
- Consider house hacking. In this, you purchase a 1–4 unit property and live in one quarter of the property while putting out the rest on rent to fund your mortgage.
- Invest in a Real Estate Investment Trust (REIT)
You Have the Option to Leverage Your Investment
Real estate is one of the few investment alternatives that allow you to invest even in commodities priced higher than the amount you have to invest. It helps you leverage your investment. Let’s suppose you have $5,000 to invest in the stock market. You will only be able to buy stock worth $5,000.
But for the real estate industry, you can invest by putting down a fraction of the property’s cost. You found a property for $200,000, but you don’t have that much capital in hand. You can use the $5,000 you have as a down payment and apply for a loan if you have decent credit and a steady salary, which will help you cover the remainder of the cost.
Once you get the property, you can put it up on rent and pay the monthly installments for your loan, or you can sell or rent out your previous property if you wish to live in this new one.
You Can Pass It Down From Generation to Generation
If you want to secure your Children future but aren’t sure stockpiling cash is the way to go, owning real estate just may be the best option for you. Real estate is a tangible asset. It’s one of the simplest assets to pass down through the generations.
Real estate that’s passed on to upcoming generations is one of the best income-producing assets and has the capability to appreciate in future. It allows you to keep the land with you or pass it down to the next generation, maintaining the family legacy. You can even sell it and make some profits.
If you’re interested in investing in the real estate industry and want to purchase a new home with a low down payment, look no further than Atlantic Home Capital, Corp. They have the best loans available for you, including VA loans, FHA loans, modular mortgage loans, non conforming mortgage loans NY and much more.
Contact their Licensed mortgage lender NY today to learn more about the different types of home financing loans.
About the Author
The author is a real estate agent with over fifteen years of expertise and understanding. He understands the complexity of the real estate market and has provided answers and guidance on real estate transactions to several clients over the years.