While many people think investing in real estate is just for the rich, the fact is that anyone can do it, even with a small down payment. Real estate is a great addition to any investment portfolio, as it allows you to diversify your investments, and many people claim it is the highest-earning asset class a portfolio can have.
Related Blog: A Beginner's Guide to Real Estate Investing
The benefits of investing in real estate are numerous as well-chosen assets can provide excellent returns, predictable cash flow, and tax advantages. If you have considered investing in real estate but are unsure whether this is the right move for you, keep reading as we look at the top reasons you should invest in real estate.
Tax Benefits
Real estate investors can benefit from numerous tax breaks and deductions that could save them money come tax time. As a general rule, owners of investment properties can deduct the costs of owning, operating, and managing their income property, reducing their tax liability and increasing their profits. These tax breaks can make owning and operating an income property affordable for a wider range of investors. Some of the most common tax deductions you may be able to take if you invest in rental property include:
- Property Tax Deductions
- Interest Deductions
- Asset Depreciation
- Travel Costs Associated With Your Investment
- Management Services Deductions
Get Protection From Inflation
Real estate is one of the safest investments you can make, as it is rare that you will see your investment lose value, and if it does, it will likely only be for a short period. In fact, as a rule, real estate tends to appreciate, making it a reliable long-term investment.
Real estate also does not lose value against inflation. While other investments may lose value due to inflation, real estate provides a hedge against inflation because as inflation rises, typically so do real estate and rent prices, making real estate a valuable addition to your portfolio.
Earn a Passive Income
One of the greatest benefits of investing in real estate is that it can provide the opportunity to generate passive income. Once you pay for the mortgage and operating expenses, whatever remains of rent payments goes to you and creates cash flow that you can use to build a larger real estate portfolio or save for other financial goals.
The great thing about passive income from real estate is that, in many cases, cash flow only strengthens over time as you pay down your mortgage or loan. As a bonus, paying down your loan helps build up your equity, which you can use to finance upgrades on your property that could further increase your passive income.
You Can Choose Your Level of Involvement
Many prospective investors are hesitant to purchase real estate as they are worried about the time commitment involved in maintaining a rental property. Fortunately, when operating a rental property, you have the option to be as involved as you want.
While you have the option to manage your rental property yourself, many investors find it beneficial to hire a property management company to do it for them. Doing so gives you the flexibility to choose your level of involvement and still maintain the work-life balance you want.
At SkyBeam Capital, we understand the importance of investing in real estate and provide our clients with the knowledge and resources they need to make informed decisions. Our team of experienced professionals can help you find the right opportunity and guide you through the entire process. So, if you're ready to take the plunge and get into real estate investing, let us help you make it a reality. Contact us today to get started.
