For the past years now, entering the real estate industry has been a booming niche. Real estate offers a wide range of opportunities for savvy, forward-thinking people. You could be an agent, investor, or even a developer. Different properties to invest on such as land, residential, commercial, retail, industrial, and mixed-use developments, publicly listed Real estate investment trusts (REITs), real estate related firm stocks, and mutual funds are all examples of real estate investments available in the market.
But, other than that, why is real estate a good investment and why should you consider it? Here are three reasons why:
Real estate values will continue to appreciate over time
There are a lot of factors why real estate value increases over time. One example is infrastructure developments where the price of land will continue to increase when markets, hospitals, schools and different commercial properties are built near the specific property. If residential and commercial construction is allowed, then expect for continuous increase. Another example is when you invest in a value-add multifamily apartment. In a value-add investment, the property experiences “forced” appreciation, where the value of the property is directly impacted by improving the net operating income. By improving the property conditions, typically, higher rents can be achieved.
Tax Benefits
Real estate investment has many tax advantages. One of the simplest ways property owners can benefit from taxes is through depreciation, which allows an owner to deduct the costs of purchasing and renovating a property from their taxes throughout the course of its useful life, lowering the overall taxable income in the process. Another way real estate investors can benefit is through bonus depreciation, which accelerates the depreciation process and takes the deduction earlier on in the life cycle. If you’re able to obtain a Real Estate Professional Status, there are additional tax benefits that come along with this status as well.
Real estate can project you from inflation
With the prices of goods and services rising, home value and rental fees will increase as well. Investing in real estate can help you generate monthly income that can financially help you when costs are going up as well. There will always be a demand for homes and commercial properties regardless of any economic situation. According to an analysis conducted by RedFin, rentals in the US jumped 14% in December 2021 to $1,887 a month, the largest rise in more than two years.
Bottomline
Considering these factors when deciding on your next investment is important. Making the right choices can go a long way. Real estate investing is not only a safe financial investment that can build you generational wealth, it is also an incredible tool that can help you gain back your precious time so that you can focus on the things that matter most to you.
Want to know about the difference between an active investment and a passive investment? Visit our previous blog here: https://t.ly/NR9q
