Top 6 Benefits of Real Estate Investing
If you read about self-made millionaires around the world, you will find that about 80% have gained their wealth by investing in real estate. This shows that real estate is very profitable investment as it has low risk and high profit margin. If you have not yet decided about investing in real estate then first learn about it. Real Estate investing is very profitable in both short and long term. Here are the top 6 benefits of real estate investing beginners should know.
Tax advantages
Real estate investing has many tax benefits. People who do jobs or businesses pay taxes on their incomes. But instead of paying taxes, governments reward the buy to let owners in two ways. Firstly there is no self-employment tax on monthly rent income. Secondly you will get the tax relief from the government on real estate insurance, renovation, maintenance and taxes.
Saves monthly rent for live in landlords
Many people live on rents worldwide. They have to pay up to 30-40% of their monthly incomes on rent payments. But the people who buy homes don’t pay the monthly rents. Instead landlords use the rent amounts to pay off the mortgages or to buy the second homes. Therefore the second advantage of real estate investing is that it saves monthly rent for the live in landlords.
Best hedge against inflation
Due to the rising inflation everyone looks worried to save the money. Most people invest in gold, stocks, shares, bonds, oil and real estate to hedge their savings against inflation. But real estate has always outperformed the all other types of investments. This is because the price of gold, stocks, shares, bonds and oil can be manipulated. But on the other hand price of real estate is hard to manipulate as reality sector works on supply and demand fundamentals.
Property value appreciates with time
Other than monthly rental income, real estate prices also appreciate with the time which is the biggest advantage of real estate investment. On average, property prices double in approximately 10 years’ time worldwide. But in third world countries, property prices double after every 5 years. Due to the price appreciation, property millionaires are increasing globally.
Constant monthly income
The fifth advantage of real estate investing is that it provides the steady income. Most people invest in real estate sector as buy to let investors. Landlords get monthly rental income when they rent out their homes or properties. Normally in good performing market, rental yield is 4-5% which is very good. Therefore real estate investing is very profitable as it provides the constant stream of income.
Easy to pay loans or other liabilities
Real estate investment also offers the opportunity to pay off the loans or other expenses. Because of the steady monthly rental income, you can easily pay off the loan. Most buy to let landlords buy homes with mortgages. They rent out the homes and use the monthly incomes from rents to pay off the mortgages. Therefore investing in real estate is best to pay off the loans.