Did you know that after the pandemic, American investors (both low-income and high) have soured on stock investments? Many think real estate is the best investment out there.
This means that more Americans are shifting into putting their hard-earned dollars into real estate rather than stocks or bonds.
Are you still on the fence, not sure about which investment instruments your stock portfolio should include? Keep reading to find out why smart investors believe investing in real estate is the way to go.
Build Your Passive Income
If you buy the right property in the right location, you could end up with a nice chunk of extra change every month after you pay the mortgage and all other expenses. That has to be the most amazing benefit of investing in real estate.
This is also called passive income. All you need to do is set up the real estate investment and then you are privy to this monthly income for the rest of your life (or until you sell that property).
Why not use your money to make real estate work for you as well? You could be at home doing your thing or you could be on a cruise in the Bahamas. Meanwhile, your real estate property is consistently making money for you.
A lot of real estate investors focus entirely upon this benefit of real estate investing, by buying up apartment buildings, or strip malls, that give them a steady monthly income. They then use this income to replace their 9-5 job. And use their free time to work on their passion projects or spend time with their loved ones.
Use Others to Grow Your Equity
Have you heard of the concept of using ‘other people’s money‘ and ‘other people’s time’ to build your wealth? Then you must know that real estate is the best way to do this.
When you rent out your investment properties to reliable tenants, you are essentially using their money and time to pay off your property’s mortgage. This means that you can build your equity monthly without lifting a single finger (except to deposit those cheques or do monthly maintenance).
If you have a property manager who takes care of all your real estate investments, then it’s even better. You won’t have to do a single thing every month. Your property manager will take care of all the complaints and issues that your tenants might have.
You don’t have to go big or go home with real estate investments. You can start with a small single-family home to dip your waters into the market. And then start building up from there, using the equity built up in one property to buy other ones.
Investing in Real Estate Gives You Tax Breaks
No matter if you are investing in real estate as a solopreneur or if you are doing it as a Limited Liability Corporation (LLC), you can claim all the expenses, interest, and maintenance fees you have for your properties during tax season. This will help you reduce your overall income level and allow you to pay less in taxes.
Also, if you employ people to take care of your properties, then you can use those monthly salaries to reduce your income even further, giving you even more tax breaks. No wonder most millionaires in the world used real estate to build their pots of wealth.
You Don’t Only Need to Invest in Homes or Apartments
The modern real estate investment portfolio doesn’t only include investing in single-family homes, apartment buildings, or commercial properties. You can invest in many other kinds of instruments such as:
REITs
You can use real estate investment trusts (REITs) to invest in real estate, without actually buying any physical properties. This removes all the headaches of investing in properties, like tenant complaints, maintenance issues, insurance payouts, liability issues, and more.
REITs allow you to invest in companies that own real estate. You can make money from REITs in two ways – you will get a regular dividend payout from the REIT, and if the value of the REIT goes up, you can sell your investment and make a profit that way as well.
House Flipping
You don’t need to be a real estate investor, necessarily. You could buy properties that need a lot of work at a discount, renovate them yourself or use a team, and then sell them for a profit. It’s a great way to make money fast, as the house flipping process usually takes anywhere from 3-6 months.
Crowdsourcing Real Estate Investing
Nowadays, companies that help you buy a real estate property in the crowdsourcing format are popping up all over the place. If you don’t have thousands of dollars to put down as a downpayment, you can get together with dozens of other real estate investors, and invest into 0.5% or 0.2% of a property.
You can either take advantage of the monthly passive income in such an investment or you can sell your share for a profit at a later date.
Portfolio Diversification
With a real estate investment, you are ensuring that your portfolio is well-diversified. You aren’t only focused upon stocks or bonds, which means that you can ride out any market volatility with peace of mind and without fear.
Become a Smart Investor by Getting into Real Estate
It’s time for you to stop discriminating against real estate investing as something only ‘professionals’ do. Even as a newbie, you can start investing in real estate by going small at first. Build your knowledge base and soon you will be teaching others how to diversify their investment portfolio using real estate.
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