Benefits Of Owning Investment Real Estate

While the thought of investing in real estate may sound a little overwhelming at first, there are actually many advantages to this type of investment. Whether you are new to investing or if you are simply looking to diversify your portfolio, here is a look at some of the benefits of owning investment real estate.

Regular Cash Flow

As a real estate investor, you can choose to rent out your property for additional monthly income. This direct income stream can be used to pay off the mortgage loan, to put toward new investments or to simply enjoy as extra income to spend as you please. Better yet, this cash flow is more stable and predictable than other types of investments. If you are renting your property for $1,000 per month, for example, you can count on getting that $1,000 every month unless unexpected issues arise.

Save on Taxes

Thanks to tax laws that reward rental property owners, you actually save on taxes when you invest in real estate as opposed to earning money from other types of businesses. Tax breaks include depreciation write-offs, lower tax rates for long-term profits and exemption from self-employment tax.

Equity Growth

As the owner of investment real estate, you also gain equity as the value of the property increases and the amount you owe on your mortgage loan decreases. Obviously, the amount of growth you enjoy will depend upon the market where the property is located. Therefore, it is important to do your research in order to choose the investment property with the best chance of a solid return. You can also help to further increase the value of the property by making upgrades to the property, such as adding new siding or doing some basic landscaping.

Of course, even if the property value does not increase significantly, you will still build equity in the property as your tenant pays down your mortgage loan for you. If you took out a $200,000 loan and charge $1,000 per month, your tenant will pay off $12,000 of the loan by the end of the year. This translates into equity for you at no cost.

Inflation Protection

While most people dread inflation because it causes prices to go up, real estate owners don’t dread it quite so much. This is because rents and property values also go up with inflation. In the meantime, fixed-rate mortgage payments remain the same. In other words, the value of the property goes up while your costs remain relatively stable.

Maintain Control

As a real estate investor, you enjoy more control of your investments than you do when investing in stocks or other forms of investment. Rather than having decisions about your investment made by a CEO of a company somewhere across the country, you enjoy total control. If the value of your investment drops, you can decide whether or not to invest further in order to bring the value back up. If you want to be more competitive, you decide how much to invest in advertisement. This means you also enjoy all of the financial rewards of the decisions you make.

If you are interested in investing in real estate and need a great team to help you get the most from your investment, contact Ankor Management to learn more!