TEN REASONS YOU SHOULD INVEST IN REAL ESTATE
Do you have enough for retirement? Do you know how much a portfolio should worth someone to safely retire? If you need something to live on when you retire, then, considering investment and real estate is a sure bet for you. Then, at retirement, you would probably be a true reflection of how financially literate you are. Simply put, the decision you make today will determine who you would become in the future.
Here’s the interesting part, it only takes a short time but a serious mindset to mine gold in investment capital in real estate assets. It gives you something to pass on to your children.
To understand the secret of wealth, read and digest the following ten reasons you should invest in Real Estate.
- REAL ESTATE HAS PREDICTABLE CASH FLOW
Real estate offers predictable cash flow; it appreciates in value, thus keeping up with inflation; it provides a higher return because of positive leverage; and it offers equity growth through debt reduction.
Cash flow is the net spendable income derived from the investment after all operating expenses and mortgage payments have been made. A good real estate investment should provide you with 6% or greater cash flow.
- REAL ESTATE APPRECIATES IN VALUE
Unlike assets such as cars, boats, computers, and furniture, real estate properties have a strong trend of appreciation, meaning that over time the value of the property increases. Why is that? .
Part of it is inflation, or the general rise in the cost of goods and service as well as pay over time, but demand is the main factor. We can’t build any more land, so as empty land gets used up, the occupied land becomes more desirable. When the quantity of land or housing is low but there is a strong demand, the value goes up.
- REAL ESTATE CAN BE LEVERAGED
The most important advantage of real estate investing is LEVERAGE! It is the use of borrowed capital to increase the potential return of an investment. In real estate transactions, leverage occurs when a mortgage is used to reduce the amount of investor capital required to purchase a property.
In real estate, the most common way to leverage your investment is with your own money or through a mortgage. Leverage works to your advantage when real estate values rise, but it can also lead to losses if values decline. Try using leverage to your advantage.
- REAL ESTATE PROVIDES EQUITY BUILDUP
Most real estate is purchased with a small down payment with the balance of the money being provided through debt financing from a lender. Over time, the principal amount of the mortgage is paid down, slowly at first, and then more rapidly toward the end of the amortization period. This principal reduction builds equity.
The gradual increase in a person’s equity in property because of the monthly payments of principal that reduce a loan amount.
- REAL ESTATE IS AN IMPROVABLE ASSET.
One of the most unique and attractive advantages of real estate is that it is improvable. This is because real estate is a tangible asset made of wood, brick, concrete, and glass.
You can improve the value of any property with some “elbow grease” and “sweat equity”. Whether the repairs are structural or cosmetic, do it yourself or hire someone, the principle is the same. You can make your real estate worth more by improving it.
- REAL ESTATE COINCIDES WITH RETIREMENT
When real estate is purchased, the cash flow is lower and the principal reduction on the mortgage is less. Over time the mortgage is paid down or paid off, and the cash flow increases. In some respects it’s a forced savings program, yielding a greater amount as time goes by which is a perfect investment for retirement as it increases in cash flow down the road.
Plan for your retirement age, real estate investment is enough to take care of your old age. Don’t leave your retirement to chance!!!
- REAL ESTATE IS TAX DEDUCTIBLE
State and local property taxes are generally eligible to be deducted from a property owner’s federal income taxes, creating the property tax deduction. A property owner can claim a tax deduction on some or all of the taxes paid on his/her property, provided it is for personal use and the owner itemizes deductions on their federal tax return.
The real estate taxes that can be deducted include taxes paid at closing when buying or selling a home and taxes paid to a county or town’s tax assessor on the assessed value of the personal property. Personal property, according to the Internal Revenue Service (IRS), may include a taxpayer’s main home, vacation home, land, or foreign property.
- REAL ESTATE HAS UNLIMITED LIFE SPAN
How long does real estate last? The answer is concise and direct; real estate has an unlimited life span. This is one of the reasons to invest in real estate.
An investment in real estate is not only a safe financial investment, but it is also an investment that can provide years of fun, happiness, and priceless memories that will last a lifetime.
History has proved that the longer you hold onto your real estate, the more money you will make. It is an investment to pass on to your children.
- REAL ESTATE HAS LOWER TAX RATE
Investment properties come with an incredible number of tax advantages. In addition to all the deductible expenses, real estate investors enjoy far more tax benefits than the typical side hustle allows.
When you own something for less than a year and sell it for a profit, that profit is taxed at your normal income tax rate. That applies to real estate, restoring and selling vintage cars, day trading, antique flipping – anything that involves buying low and selling high.
- REAL ESTATE GAINS ARE DEFERRABLE.
The law permits the gain on the sale of an investment property to be transferred from the property being sold to a new property being purchased, hence deferring the payment of any tax on the sale of the property.
There is one final advantage to a real estate investment and that it is understandable and easy for most everyone. It’s easy to purchase, it’s easy to finance and there are no insurmountable financial barriers to enter. It’s easy for most investors to improve their properties and it’s easy to use the tax advantages. Real estate investing is looking better and better for average Nigerians.
By: Iyiola Oluwatosin D.