Real estate and other property investments have always been a popular option in the financial sector, and for a good reason. There are many factors that make real estate investments attractive to beginners and veterans alike. If you’re trying to decide whether becoming a property investor is the right choice for you, here are some of the reasons why the answer might be yes
1 – Build your assets
One of the main downsides of investing in real estate is that it involves taking on a whole lot of debt. In most cases, buying property will likely require taking on mortgages and loans, saddling you with the need to repay those debts with interest.
However, one of the advantages of investing in real estate is that you’ll finish paying back those loans sooner or later. And then you’ll own that piece of property, adding a valuable asset to your portfolio. One that — if you’re lucky — can be expected to keep appreciating over time.
This does more than free you from repayments. Owning real estate can give you access to large amounts of funds for other projects. Funds that you can access by either liquidating the real estate asset or putting it up as collateral for other loans.
2 – Improve your credit score
Making regular payments on loans and mortgages can also do wonders for your credit score. And that, in turn, can make it easier to access funding at low-interest rates and without the need for collateral.
When done well, the combination of regular debt payments with your growing real estate portfolio can create a positive feedback loop, where having more capital gives you access to more credit which allows you to afford more profitable assets.
3 – Access different options
As is the case in many areas of the finance sector, there is plenty of room in the real estate and property development market for savvy investors to diversify. This can be used to help keep your portfolio stable even as certain areas of the market go into a crisis.
That stability is also helped by the fact that governments and the public at large have an interest in supporting the real estate and property development market. This often leads to subsidies and other measures being used to help stabilize the market, as this article exemplifies.
4 – Get tax advantages
This is one of the reasons why the ultra-wealthy often invest in real estate. Depending on your local tax code, owning valuable properties may give you a wide range of tax advantages. You may be able to list mortgage payments as deductibles, deduct the interest on your loans, deduct the cost of maintaining the property, and more. Property depreciation may also be deductible.
The issue here is that tax codes are typically very complex, and they vary from jurisdiction to jurisdiction. If you want to get the most tax benefits from your real estate investments, you’ll need help from an accountant.
5 – Control your assets
One of the advantages of real estate investments is that you own the properties in your portfolio. This means that — barring the need for permits and other local regulations — you’re free to do whatever you want with the asset in question.
This gives you the freedom to expand, subdivide, renovate, and otherwise alter any given property to help increase its value and earning potential, which can be a very profitable investment.
