10 Reasons to invest in real estate ⋆ Lota Income alternative sources of passive income (2024)
Real estate investing
There are many reasons to invest in real estate, earn an income from real estate, renting out a house, apartment or a spare room. Maybe you have a shed or vacant block that you could lease out. Commercial property, wholesaling or flipping houses could be another income source. Whatever avenue you decide can produce a source of income that is passive or as active as you wish.
Real estate investing is relatively easy to get into, not requiring any specialist knowledge and getting finance is usually a simple matter.
Real estate is real, bricks and mortar or actual land, it is a finite resource. As the population continues to rise, there are no more land being made. Therefore real estate is fairly safe compared to other forms of investment and has continued to rise in value over the years.
Researching real estate is easier than the share market with it many complex systems. With real estate you check out whats on the market and decide what type of property you wish to invest. This is a simple version of real estate investing, there are many factors to consider when investing in real estate.
Finance is more available
Leverage can be used to great advantage. The rate of leverage used in real estate can be as much as 95%-100% depending on the deal you negotiate. If you can negotiate a 10%-20% below market value, you should be able to get 100% finance. I have done this with my last 2 real estate investments. Plus this holds you in good stead if the market doesn’t move much as you have already achieve your profit when you bought at below the market price.
Flexible
Flexibility is another good reason to invest in real estate. You can invest for long term, short term, passive income, positive cash flow or capital gains. Depending on your goals, real estate can give you added income if positively geared (rent is greater than holding costs). Passive or active, you have total control over your real estate investment.
Multiple streams of income
Different forms of real estate investing, provide many streams of income. Sub dividing, renovating, developing can provide substantial returns. Your block maybe big enough to split into 2 blocks or more, enabling you to double your return. Renovating can also return good profits if you keep a close eye on costs and keep to your budget. Developing real estate will probably return the best return, however it is also the most risk.
Pricing is always negotiable in real estate investing, you may have to investigate many sites before you come across a deal that suits you. Never take the asking price as gospel, if you are able to find out the buyers situation and their motivation for selling, you can negotiate a deal that is a win win for you and the buyer.
Tax concessions
Holding real estate as an investment may provide tax breaks, which can be used across your income streams. Tax breaks may include depreciation of the building and fittings, negative gearing which costs you money initially, all costs you incur to produce income from your real estate investment.
Good base investment
Real estate is a strong asset, which can be used as a backing for other investments. Once you have equity in your properties, it can be used to make more investments. These other investments maybe more real estate, shares, gold or anything that you wish to invest in.
Liquidity
Home buyers are the majority buyers in real estate, roughly only 30% of real estate buyers are investors. This makes real estate a fairly easy investment to convert to cash if required. Home owners often buy their real estate because they like the property and are happy to pay whatever the buyer sells for, investors on the other hand always make their buying decision based on figures.
OPM- Other peoples money
The best part of real estate investing is other people helping you buy your investment. Through renting you gain a cash flow and also pay off your investment debt if it is positively geared.
Check out my post on why you need multiple sources of income HERE
Share this Article – Knowledge is Increased by Sharing but Not by Saving.
The benefits of investing in real estate include passive income, stable cash flow, tax advantages, diversification, and leverage. Real estate investment trusts (REITs) offer a way to invest in real estate without having to own, operate, or finance properties.
Perhaps the oldest way to earn passive income on this list. Invest in property to rent or sell at a profit. Consider different markets and property types for the best investment opportunities.
Investing in real estate can be a good idea if done thoughtfully and strategically. It offers the potential for steady income, capital appreciation and tax benefits. However, it's not without its challenges, including high initial costs, property management responsibilities and market risks.
Passive real estate investing is an umbrella term that encompasses investing strategies like crowdfunding, remote ownership, and real estate funds. There are multiple ways that both accredited and non-accredited investors alike can begin to generate passive income.
Real estate is one of the best ways investors can generate cash flow. The monthly income that rental properties generate can offset investors' expenses and put money back in their pockets. Over time the initial money the investment took is made back, and a positive return is seen.
Real estate investments can serve as a hedge against inflation. Real estate ownership is generally considered a hedge against inflation, as home values and rents typically increase with inflation. There can be tax advantages to property ownership.
You can create additional residual income through investments such as real estate. By investing in real estate, you will create monthly cash flow that will build your residual income over time. The one-time payment that an investment requires will be returned to you over time as the investment generates income.
With a REIT, you earn a share of the income the properties produce without having to buy, manage or finance them—making it a truly passive real estate investing option. REITs can be a good option for people who want to invest in real estate outside of their retirement accounts, but don't want to be a landlord.
Real estate investments tend to have high transactional costs, especially in legal and brokerage fees. The process of acquiring a new property is also very long and tedious with lots of legal formalities. Another disadvantage of property investments is that they are not easy to liquidate.
In conclusion, residential real estate can provide financial advantages, such as long-term capital appreciation and potential tax benefits. However, it also comes with some potential disadvantages, such as high upfront costs and ongoing expenses, as well as the risk of market fluctuations.
Real estate often proves to be a lucrative investment, offering both income — in the form of rents and appreciation — when you sell appreciated property at a profit. It's also a good way to diversify your portfolio, as an asset that's subject to different influences than stocks and bonds.
Accelerated depreciation, the investment tax credit, and lower taxes on corporate profits and capital gains all increase the demand for private physical capital. Public policy can also affect the demands for other forms of capital.
Real estate investments can occur in four basic forms: private equity (direct ownership), publicly traded equity (indirect ownership claim), private debt (direct mortgage lending), and publicly traded debt (securitized mortgages). Many motivations exist for investing in real estate income property.
Address: 787 Elvis Divide, Port Brice, OH 24507-6802
Phone: +9779049645255
Job: Senior Healthcare Specialist
Hobby: Cycling, Model building, Kitesurfing, Origami, Lapidary, Dance, Basketball
Introduction: My name is Sen. Emmett Berge, I am a funny, vast, charming, courageous, enthusiastic, jolly, famous person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
