The 4 Different Wealth Building Tools of Real Estate Investments

An investment vehicle can be referred to as a product which is used by investors with the sole aim of making positive returns. Investment vehicles offer individuals or businesses the opportunity to invest and, ideally, grow their money at a regular rate. There are low-risk investment vehicles, for example, bonds or certificates of deposit (CDs), while there are others which carry a greater degree of risks such as options, stocks and futures.

Individual Retirement Account (IRA) is mainly a savings account having big tax breaks. Hence, it is a perfect way to invest money for your retirement. Stocks offer investors a stake in a company. Investing in a company’s stock makes it possible for you to share in the company’s profits and gains.

For those individuals or businesses with a mind toward an investment vehicle with more control real estate provides a perfect outlook. The following are some of the reasons you should consider investing in a real estate property.

Appreciation Overtime

Appreciation is the first advantage that makes real estate a stand out from other investment options. Once you have secured your first rental property, you made a down payment, the value of your real estate property keeps on appreciating as you continue to pay down the loan.

Although there may be a depreciation in value due to a recession, the hope is that the value of your rental property will still rise over time. For this reason, you are advised to buy a rental property as you are able, so that the value of your real estate property will be worth more in the future.

Cash Flow from Renting

Another good reason to invest in real estate is the cash flow you receive from the tenets. Renting out your property helps you generate cash flow, monthly and annually. This will be another source of income for the property owner. Hence, you can focus more on your business or work, further reinvesting in real estate properties.

Additionally, the cash flow coming from real estate investment is highly predictable and stable, compared to other investments. The cash flow generated from your real estate home can also be used to live comfortably during the good times or maneuver the bad times.

Mortgage Paid by Tenants

When you buy a real estate property with a loan, the mortgage payment will be made by your tenants. What this means is that there is likely to be an increase in your net worth every month. This is because the loan is paid down on a real estate investment property can be likened to a savings account that keeps on growing automatically. While your tenants are the one making the monthly deposits, you have little or nothing to worry about.

Over time, the amount owed on your real estate property keeps on reducing. Your tenants continue to make payment on your behalf. You get richer in the process. If you keep the house as rental for 15 to 30 years you can have the whole mortgage paid off. Hence, you become the rightful owner of the real estate home. You can decide to keep on renting it out or sell it.

Tax Break

In case you are not aware, owners of rental properties are rewarded by the government! Government policies have been put in place in a way that offers real estate property owners an opportunity to enjoy several tax benefits.

As a result of this, a real estate property owner earning $75,000 through real estate saves more than another person earning $75,000 from personal business. Cash flow which is earned from real estate properties is not subject to self-employment tax. Real estate owners enjoy significantly lower tax rates from the government.

All these are some of the reasons why you should think about investing in real estate. Even though there are a lot of family commitments and expenses, nevertheless, it will still be an incredible idea to invest your extra cash, after settling all bills, into a real estate property. As you are taking charge of the situation, you are also securing a financial future for yourself.

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