Real estate investment isn’t just for the rich and famous. With extensive research and the right preparation, anyone can enjoy the profits real estate has to offer – even if you only have a small down payment.
So, what are the benefits of investing in real estate?
Eligible for Tax Benefits
With real estate, you can deduct mortgage interest and property taxes on your investment properties to lower your tax liability. Additionally, if you invest in real estate through a self-directed IRA or 401k, all the income generated is tax-free.
You Can Use Real Estate Leverage
Leverage is the use of different financial instruments and borrowed capital to boost an investment’s potential return. With as little as 20% down on a property, you can own 100% of the property free and clear. The remaining 80% of the loan is funded by a lender. Since real estate is tangible and can serve as collateral, these financing options are readily available.
Cash Flow Stability
When you invest in commercial real estate or buy-and-hold properties, you can rent out your space to tenants and create cash flow stability. Typically, cash flow will strengthen as you continue paying down your mortgage and building up your equity.
Portfolio Diversification
Real estate investments can boost your portfolio diversification, which could protect you in times of economic turmoil. That’s because real estate usually has minimal to zero correlation with other major asset classes. For instance, if there’s an economic downturn affecting stocks, your real estate properties might still be increasing in value, and that can protect you from the stock losses.
Good Hedge Against Inflation
As prices hike due to increased demand (and the value of the dollar decreases), so does the cash flow you’re getting from your properties. For instance, if the home prices rise in the market, rents will basically do too, and hence you’ll just be keeping pace with inflation.
Be a Better Investor!
Thinking about investing in real estate? Consult the experts at Ryan Luthi. We have the proficiency and experience to help in your viable, profitable real estate ventures. Call us at 612-217-8700 today!