Investing in Real Estate – Is Investment Property Right for You?
When done right, investing in real estate offers significant benefits. In addition to predictable cash flow and excellent returns, investing in real estate provides tax benefits and portfolio diversification. Real estate investors earn money through multiple sources including:
- Rental income
- Profit generated by business activities that depend on the property
Savvy investors understand the unique benefits of real estate investing. With a little knowledge and experience, even novice investors can earn significant returns.
Many people wonder if investing in real estate is the right choice for them. Although there is some risk, there are numerous benefits as well. When done right, investment properties provide years of passive income. However, it’s important that individuals looking to invest in real estate do their research and purchase properties in desirable locations. They should also consider seeking out property within California’s Opportunity Zones. This can help ensure the greatest returns.
Generate Cash Flow
Perhaps the greatest benefit of real estate investing is the ability to generate cash flow. Unlike other types of investments which can lose value over time, the money earned from investment properties only gets stronger as owners pay down their mortgage. This make real estate investment an extremely attractive option.
Real estate values increase over time, providing the opportunity for investors to make a sizeable profit when they decide to sell. Another benefit, rental rates increase as well, boosting the amount of income investors earn each month.
Take Advantage of Tax Breaks & Deductions
Real estate investors can take advantage of several tax breaks and deductions. Almost all of the money spent on the cost of owning, operating, and managing investment property is deductible. Investors may even be able to defer capital gains by using a 1031 exchange. This can end up saving investors a considerable amount of money at tax time.
As real estate investors pay down their mortgage, their equity grows. This is important as investors can turn their equity into cash should an unexpected expense occur. In addition to making regular mortgage payments, putting down a larger amount of money at the time of purchase can instantly boost home equity.
Diversify Your Investment Portfolio
Diversification is important for a number of reasons. Spreading funds into different types of investments reduces overall risk. Real estate has a low correlation when compared to other major asset classes. This means that adding a real estate investment to an already diversified portfolio can reduce volatility and provide a higher return per unit of risk.
Strategic Sales and Marketing offers a variety of real estate sales and marketing services. Our team has years of experience working with the real estate industry and understands the steps required to identify and connect with potential buyers.