The urgency of a roof over one’s head showcases the importance of real estate and the significance of housing in the modern world. And being a vital aspect of our lives, real estate is the type of asset that will always remain a wise investment option. So, let’s look at the top 5 reasons to invest in real estate to see the importance of real estate.
What Is Real Estate Investing
Real estate investing is essentially the action of purchasing, managing, and selling or renting out properties in the pursuit of financial gain. The importance of real estate has solidified its place in the market, making it a reliable asset to invest in. To all investors experienced with other types of assets, properties are a much safer option than most other types of investment, as you’ll see for yourself. The importance of real estate investing is that it’s much more stable and relies heavily on the undeniable value that any type of property has to people – be it to ordinary men and women purchasing and renting homes or a businessman buying a property for commercial purposes. But then, the question that follows is which of those 2 is the best type of property to invest in?
Best Type of Property to Invest In
Before we get to the 5 reasons to invest in real estate, let’s look at your options. What is the best type of property to invest in? There are 2 main types of real estate investment deals you can engage in – residential and commercial. Commercial properties are buildings with 5 or more units or any property used for business purposes and include buildings such as:
- Manufacturing & factories
- Warehouse facilities
- Multifamily buildings
- Apartment complexes
Another type of real estate investment deals you can get into are residential properties. These are either single-family homes or residentials of up to 4 units. Some examples of residential properties are:
- Single-family homes
- 4-unit condos
So, which of these real estate investment deals is best for you, which of these is the best type of property to invest in? Well, it depends on a couple of key factors. It depends on how much profit you intend to make as well as the approximate size of the current capital you have and are willing to invest. Naturally, you’d have to set realistic goals, but if your current budget is in the thousands, you can only invest in residentials. Commercial property investment has a higher return rate, but it’s a lot more expensive to obtain and harder to manage, renovate, and rent or flip. Really, the best type of property to invest in is the type your finances allow.
Top 5 Reasons to Invest in Real Estate
Want to know what are the big 5 reasons to invest in real estate? As we’ve talked about, the importance of real estate is the reason that properties are some of the most solid investment opportunities available in the current market. And although the safety of the asset is of prime importance, there are many more benefits to investing in properties. So, let’s look at the top 5 reasons to invest in real estate!
1. Steady Passive Income
Investments often bring a significant amount of income, but what sets real estate apart is the stability of the passive income that this type of investment provides, especially with rental properties. Real estate investment deals can bring you significant returns and result in a steady income of substantial amounts. For example, if you rent a unit or a single-family home to a family or an individual, you are supplied with a continual passive income. Of course, the investor needs to make sure the tenants don’t have a history of neglecting to pay their rental fees. As with any sphere, caution is always welcome, but the steady inflow of passive income from real estate investment deals can be very beneficial.
2. Tax Advantages
Another important one from the list of the 5 reasons to invest in real estate is the tax benefits you get in the US. Many of the expenses connected to owning an investment property are tax deductible! Some of these include:
- Property taxes
- Mortgage interest
- Property management fees
- Property insurance
- Costs associated with ongoing maintenance
- Repair costs
- Fees for marketing to potential renters
Plus, if you don’t plan on renting and instead intend to resell your property and do so for a higher sum than you obtained it, the gains you receive will not be taxed as income. Instead, they will be taxed as capital gains which are usually taxed at a lower rate, resulting in your ability to retain more of the profit you have made. Real estate investment deals give you many tax benefits!
3. High Returns
Real estate investment also brings some of the highest returns in the market. The value of the properties you obtain now can increase dramatically over time, at which point you can resell and receive solid gains. However, you certainly need to invest in the right properties to achieve such results. The best type of property to invest in for the highest returns of all are commercial real estate investments. Make sure the foundations are in good condition, repair and renovate the building, and then hold on to it while securing maintenance for the property.
4. Protection from Inflation
The importance of real estate investments are widely recognized as a solid form of protecting your capital against inflation. Usually, when pricing for all types of goods or services rises so do home values and rents. In these cases, investment properties will provide you with rising passive income protecting your finances from rising costs everywhere. Naturally, the best type of property to invest in for protection from inflation is a rental option. In times when inflation kicks in, real estate investment deals you’ve procured in the past can easily help you fireproof your capital from the risks of economic instability.
5. Building Capital
Naturally, the importance of real estate investments is, above all previous 5 reasons to invest in real estate, in your potential ability to build lasting and consequential capital. That is, in fact, the end goal of all types of real estate investment deals and generally all investing endeavors. Anytime you sell a property for more than you bought it, you procure significant gains which, in the long run, allows you to build capital. And if you want to know how to invest in real estate and gain the most out of it, keep on reading!
How to Invest in Real Estate Right Now
Having read the big 5 reasons to invest in real estate and knowing the importance of real estate, You might be wondering how to get in on these lucrative deals yourself. Of course, the biggest issue with investing in properties is the time that the pursuit and management occupy. But there’s a way of bypassing this! There are professionals who handle the pursuit, purchase, renovation, and maintenance of properties, providing you with a steady passive income or gains from reselling without taking up your time.
If you’re interested and would like to try, get in touch with GCG Real Estate and start your investment journey!