6 Benefits of Real Estate Investment for Savvy Entrepreneurs

By  |  0 Comments

While being a property investor may not be your most glamourous job, it is sure to give you results in the long run. You can definitely earn a lot of money by invest in real estate, especially if you’re entrepreneurially inclined. Listed below are six reasons for you to consider purchasing some rental qualities:

  1. Income: There are several people who purchase rental properties because it is a source of income- any additional money that is left in the end goes towards compensating debts. This constant money flow will enable you to earn without much effort on your part, in a passive manner. This gives you time to time to focus on your business, which you can create and invest in, you could go travelling or even reinvest in additional property.

Income from property investments is relatively more stable and certain than other industries and companies. This is the best option especially for entrepreneurs who have experience with the good and bad of start-ups. This money flow will get you through the bad times and make you more comfortable during the good.

  1. Tax benefits: The government awards apartment proprietors. Therefore if you had invested $100,000 in a small business and $100,000 in rental properties, your investment on rental properties will allow you to have more money.

Income that you receive from your rentals are not eligible for self-employment tax. Additionally, the federal government offers tax benefits such as depreciation and lower tax rates in the case of long term profits.

  1. The borrowed funds pay lower: When you buy properties that are under a mortgage, it is your tenant who is responsible for paying the loan payments every month. This in turn increases your net worth every month. As the loan gets paid off, your properties become a checking account that grows on its own, without you having to deposit money every month.

While today you may owe $200,000 on the property, in a year, you may owe $195,000. This shows how you have gained $5000. Irrespective of duration of the loan, it becomes worth less and less to you each year because whether you sell the property or continue renting it out, your tenant will have to pay the mortgage.

  1. Appreciation: As the loan becomes lower, the need for the property becomes higher. Although recessions cause values to fluctuate up and down, values generally stabilise and increase over time. It is therefore to be in this business for not just one year or one decade, but for the long run. Over a substantial amount of time, your investments will give you a lot more than you spent on them.
  2. A hedge against inflation: inflation causes prices of objects to increase because the value of money decreases. While inflation can cause problems for you when it comes to buying everyday items, it is a definite profit for you in terms of increasing rates for rent and property values, while your fixed rate loan payment does not increase, your income will constantly rise, this is the reason property is known as a hedge against inflation.
  3. Control: if you become a property investor, you will have control over the majority of your earnings in a tangible place, and you will be responsible for your success or failure. When the rental market gets more competitive, you can compensate by advertising more. Of values drop, you can wait for them to rise up or enhance the property.

To make profits by being a property investor, you must learn how to find the best bargains and evaluate your investments. Additionally, you must remember to treat your investments like a business and allow it to grow the way a business would. While your participation may be passive for long periods of time, the ultimate payoff will be worth your wait.