01/09/2020
There are several advantages that make real estate a good investment for some individuals โ including generating passive income, building wealth, offering tax advantages and building equity. While riskier than other investments, investing in real estate can offer greater returns than investing exclusively in the stock market.
The following are the advantages of investing in real estate:
1. Diversifying Your Portfolio - You can enjoy greater security with tangible assets as opposed to the more volatile nature of stocks, mutual funds and bonds.
2. Making Additional Income- Whether you enjoy passive income from a hands-off investment or you choose to purchase and manage a property yourself, investing in real estate can offer an additional, stable income that is protected from the volatility of the stock market.
3. Enjoying Competitive Returns - You enjoy the returns every year from the passive income generated by the rental property, and you may also enjoy an annual appreciation of the propertyโs value.
4. Hedging Against Inflation - Inflation will increase the cost of living, which means your cash flow will increase while your cost of ownership does not. Inflation also increases the value of your property, so it will be worth more when you are ready to sell in the future.
5. Benefiting From Tax Advantages- Even if you choose to purchase and manage a property yourself, you can also benefit from several tax deductions โ like deducting maintenance and operating expenses, depreciation or paying long-term or short-term capital gains when you sell the property. You also will not have to pay self-employment tax on the cash flow from your rental properties.
Is investing in real estate worth it?
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