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5 Reasons to Invest in Real Estate

 

Investing is something that not enough people even consider as a viable way to enhance their overall financial health. The truth of the matter is that it can lead to some startlingly high long-term returns and it’s a financial decision that you’re unlikely to regret.

There’s lot of things that you can invest in. Many businesses are well-known for offering good Return on Investment (ROI) for their investors, and it’s not hard to find the most reputable ones.
You could also seek out companies that will pay out dividends, like the ones on this Sure Dividend list. But perhaps the most reliable investments in 2018, are in real estate.

There is a ton of benefits to investing in real estate, and while the most common way is to actually buy property, it’s not the only way. You could invest in real estate focused companies, or you could invest in construction. There’s a few different methods.

Here’s five reasons why you should consider this:

1. Supply is Low

Well that doesn’t sound too good does it? It actually is a good thing though. In fact, it’s one of the biggest reasons to invest right now.

With the supply of houses out there being low and demand being very high on account of a rising population, that means that the value of houses is higher than normal.

The problem is being acknowledged and there are many new houses being built, but this is very much outpaced by the increase in demand for homes.

If you are a property owner, you will be pretty much guaranteed tenants. This won’t last though, there will come a time where the supply overtakes the demand again.

Who knows how long that will take. It could be ten years from now or it could be in the next couple of years. Either way, the time for you to act is right now.

2. Tax Benefits

No matter where your income is coming from, you will have to pay taxes on it. That’s been a pretty universal truth since the dawn of time.

I think we’ve all accepted that by this stage. So it won’t come as too much of a surprise that a real estate investment comes with some tax implications.

But where there’s taxes, there are often tax benefits. There’s a lot of expenses that come with owning real estate, and most of them are liable tax deductions.

This includes electricians, plumbers and other handy men, but it will also cover you for the interest you’re paying on the mortgage.

The deductions are numerous and then there is also depreciation to think about. This is slightly more complicated but you can find out more about it right here.

You won’t really find these kinds of tax benefits with any other form of investing. It’s a huge advantage.

3. Amortization

Amortization is probably not something that you’re terribly familiar with. It’s an accounting term referring to how the cost of an intangible asset is allocated over time.

That description probably doesn’t clear it up too much, so let me be more specific in how it regard to real estate.

When we discuss amortization in this regard, it’s to do with the mortgage that you’ve taken out to buy this new property that you’re investing in.

The two primary components of any loan, mortgages included, are the principal and the interest and you are less likely to be concerned with the principal.

This is because the principal will be covered by the rent that your tenants are paying, and so you’ll just have to pay interest out of your own income.

And as we mentioned already, that doesn’t actually have to come out of your own income because it can be covered by tax deductions.

So that’s the basis of amortization as it applies to real estate investing. And as you can tell, it’s another huge benefit.

4. Technology

It’s no secret that technology is advancing. It’s advancing at a pretty alarming rate. We’ve reached a point where technology is improving faster than it ever has before.

A bit part of the reason for this is because of how effective Artificial Intelligence has become, and this is changing absolutely everything.

This of course includes investing. You could argue that this is for the worse if you are used to the old methods of investing, but for the tech-savvy among us, it’s an advantage.

Investing in real estate used to involve a lot of travelling to view locations and a lot of hours spent reading and analyzing documents.

Pretty much all of that stuff can now be done from home. Google street view allows you to get a good look at the property as well as a sense of the area.

And advertisements for housing can now be done online too. There’s websites like Craigslist for that and you can also use Craigslist to find handymen or other services.

No more collecting your rent in person either, that can all be done by way of a standing order now.

And to top all of that off, there is systems out there now that will do all of the leg work of investing for you.

Investment advisors have always been a thing, but now they come in the form of an AI assistant, which is far more effective.

Technology is changing the investing game. So if you’re not up to date with your tech knowledge, you should get on that before you’re left behind.

5. Low Interest Rates

In the United States in particular, interest rates have been steadily declining and are at the absolute lowest that they’ve ever been in 2018.

I’ve talked about it a bit already, but if you are investing in real estate the traditional way, you are going to have to get a mortgage. Unless you are one of those lucky few who happens to have enough money lying around to be able to buy the property straight up, this is the only way to do it.

But you know what? That’s not that big of a deal, because interest rates are as low as 4% in some places in the U.S.

Like some of the other stuff I’ve mentioned, that’s probably not going to last forever. I mean it might actually get lower, but it could get an awful lot higher too. Strike while the iron is hot. The less repayments that you have to worry about, the more you can get out of a good real estate investment.

Conclusion

There’s very few ways to guarantee yourself a steady flow of income that involves very little effort, but an investment in real estate is one of those methods. And there’s a ton of other benefits to it.

If you put in the time at the beginning to get some solid real estate investments off the ground, you’ll soon realize how strong a financial decision it is.

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