6 Benefits of Investing in Real Estate
Written by Evelyn
Most people do not think of real estate as a primary asset class in their investment portfolio.
In fact, when discussing potential opportunities with your bank or financial advisers, they seldom advise you to invest in real estate. Rather, what we see is that you are shown all the traditional asset classes like stocks, bonds, high interest accounts, and ETF’s.
Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate..
This is not to say that you should put all your money in real estate. Instead, it is worth considering investing a portion of your investments in Real estate.
1. One of the benefits of investing in Real Estate is that it is a tangible asset backed investment that allows you to build equity until you either refinance or sell.
The benefit of this is that, even if the market was to go through market cyclicality, All you need to do is to hold off to the asset and sell only when the market is ina boom.
2. Monthly cashflow: If you find the right property with positive cashflow, you can start to earn near passive income from your investments immediately.
3. Multiple profit centres: This is a great benefit of investing in properties. Firstly, you benefit from the monthly cash flow, secondly, you are also getting a monthly mortgage pay-down, and thirdly, you can also benefit from market appreciation. A good property investment is one that can gaurantee you both cashflow and mortgage pay-down at the very least.
4. Stable monthly income: This is another great benefit of investing in properties, since tenancy agreements can be signed for one year or more at a time. You are able to make plans and budget for your cash flow when you know exactly how much profit you are making each month.
5. The possibility to recycle your equity into another property: As your equity builds up over the years, a lot of investors are able to pull out some cash from their properties to make another property purchase thereby increasing their net worth and the number of properties they own.
6. Guaranteed return: This is one asset class that you can be sure that if you put a 20% down payment, you, The least profit you will make at the end of your mortgage is a 400% return just through your tenants paying down your mortgage for you. Then when you add on the cash flow you would have made all through the way and the potential year on year capital appreciations, the numbers begin to make a lot of sense.
These are a few of the benefits of investing in real estate. I know this can make it very exciting and potentially spur you to want to jump in real quick, it is important to note that real estate investing also comes with some risks.
It is your responsibility as an investor to be aware of the risk involved in any asset class you are interested in, and be comfortable taking on that level of associated risk as an investor.
I will be sharing some of the most important risks to be aware of as a real estate investor, and what you can do to mitigate against that. Stay tuned!
Written by Evelyn
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