Generally, when it comes to investment options, real estate is considered one of the most stable. The value of real estate constantly goes up, and while it could potentially come with a great deal of responsibility and upkeep, it’s still one of the smartest ways to invest your money. Here are just a few of the reasons why.
It can generate on-going “passive income”
While the term passive income might be a bit misleading, in that investment in real estate is rarely really passive in the traditional sense, it can’t be denied that real estate could potentially generate a lot of income for you over the time you own the property. Think of investing in rental properties, where tenants have to pay rent every month. While this takes a certain degree of upkeep, the financial benefits can be excellent. Even a more modest real estate investment could be used as a source of extra income, such as the homeowner who rents a room on Airbnb, or even a property owner who rents out the whole home. There’s a myriad of ways to generate income off a property.
Low volatility and increasing property values
Entrepreneur.com explains that while numerous factors beyond your control can affect an investment in stocks, real estate is much safer due to the fact that if you hold on to your property for an extended period of time, the value of your home is bound to go up. Real Estate market trends are fairly predictable, with stable price appreciation. Thus, even if the market cools a little, if the investment is long-term (and you’re not simply “flipping” the home), the value of the property should steadily increase.
It’s a tangible asset
Real estate is a tangible asset – meaning it’s something that exists in physical form. It’s separate from a fluctuating investment and has a natural value – not only in the home or building itself but in the land it’s built on. Investopedia notes that tangible assets such as this are also protected from inflation and make for an excellent addition to a diversified portfolio. Shupilov Real Estate also notes that the equity you build up through a real estate investment could be used to finance other investment opportunities.
Another significant benefit of owning real estate is the fact that it can be very advantageous from a tax perspective. As listed by Entrepreneur.com, you can get tax deductions on mortgage interest, expenses, property taxes, depreciation and more.
Indeed, real estate investment is a tried and true way to invest money and build up a steady profit and is usually among the safer investment choices you can make.