Four Reasons to Invest in Real Estate

Real estate can be a very lucrative business. It takes a lot of work, but if you’re willing to put the work in you’ll definitely reap the rewards. Prior to meeting Vince, I purchased my first multi-unit while in college. I always wanted to have my own business but I wasn’t sure how to get started. I met with a local entrepreneur and real estate investor who provided some insight on rentals and why this would be a good industry.  It all just kinda clicked from there. So if someone were to ask me why invest in real estate, these would be my top four reasons.

1. Great rate of return with less volatility, not to mention the passive income

   So that’s more like three reasons in one response, but they all flow together! The cool thing about real estate is, if you’re able to make that initial investment your money will continue to work for you. Once you put spend the money to purchase the property and complete any renovations, the hard part is over- now it’s just finding a good tenant. Even if the market crashes, your real estate is not going to take as big of a hit as the stocks will. People will always need a place to live. You may have to adjust your rents from time to time to fit the market, but overall it’s pretty stable investment.

2. Tangible assets and appreciation

   Real estate is an investment that once you have it, it has tangible value. If you decide at some point you want to sell it, you can. And over time, the value of the property will go up. So if you hang onto the property for five or ten years, you will be able to sell it for more than you purchased it for (unless you let it fall to crap!) There aren’t many things you can purchase that will increase in value over time, which is what makes the real estate market so intriguing. They say that every 20 years your property will double in value (on average). So it’s a great long term investment to make that will continually pay you back.

3. Tax benefits

   There are lots of tax benefits when you purchase real estate. Deductions that are accounted for include depreciation, property tax, repairs, or any other form of expenses.

4. Leverage

   With every payment that you make towards your mortgage, you gain more in equity. With more equity in your properties you have more leverage to purchase more properties (or other investments!) This is probably one of the best things about real estate. Once you have a property, you can then use the equity from that property to buy another. This was one of the main reasons I got into real estate because I wanted to start a business. When I was introduced to real estate, building equity was a big thing for me personally because I didn’t have a ton of cash. If you take care of your rentals, they will be quick to rent therefore reducing the risk of vacancy and stabilizing your cash flow. This makes it easier to take on other investments or projects and helps hedge your overall risk.

I am probably a little biased, but overall I think real investing in real estate is a great investment. It is definitely a venture that requires not just money, but your time. Worst case scenario is if you don’t like it you can always sell- but at least you tried and learned along the way. Best of luck!