Real estate offers a great source of passive income. Since there is always a demand for properties, the real estate value often appreciates, which contributes to your profit.
There are several reasons why real estate investment is a profitable option which is discussed below.
1. Mortgage Rates Are Still Low
Even though today’s mortgage rates are higher than the lowest of all time, they are still running below average. Further, the climate for investors is more tolerant as the economy continues its growth. This means that even though your interest rates might have increased, the earnings would also be higher.
Note that the housing industry is also on a positive run. Home prices are rising throughout the country and the interest rates are also on the incline. Overall, if you lock on a lower price or mortgage rate now could be a smart move for the future.
2. Real Estate Investing Beats Renting
The total value of the homeowners surpasses that of the renters by a long way. Besides, as for the people who do not have stock portfolios, the forced savings made by paying a mortgage create more wealth than they would normally do.
Forced savings mean that you have to make the regular payments if you have a home loan. These payments add to your home equity every month. Renters who should discipline themselves to invest and who can pick their savings at any time trail behind the homeowners
3. Home Prices Show An Upward Trend
Even though there is no definite percent of the growth of home prices, they rise by 4% annually on an average. Note that the possibility of immediate gain is not the best of actors that should attract you. Instead, the safe and steady return history of the investment is the foundation of real estate investing
4. Investing in real estate is comparatively safe
Property is a comparatively safe investment. It might be true that several homes lost their values rather quickly. However, those markets have made a comeback every time. Besides, the average rates have been higher than the average levels.
5. Property Investments Get Preferential Tax Treatment
In case someone buys stock ad decide to sell it a few years later, they would have to pay the capital gains tax. If you buy property, on the other hand, there are many ways to get the profit without being charged a fortune by the tax authorities.
- It is possible to sell a property and then buy another one using an exchange policy. This will exempt you from a tax on the profit.
- You are allowed to borrow against the increased equity and are allowed to not sell the same.
6. Real-Estate Investing Is Flexible
Real estate Investing offers flexibility. You can invest and then build the portfolio. Meanwhile, you can use rental income or others as the main income source. In other words, you can manage other projects and properties around your schedule. Further, the real estate industry does not come with a salary cap and your earning potential is unlimited.