Building Wealth by Investing in Real Estate
Investing in real estate is a time-tested way to successfully build wealth. While there are many ways to invest your savings, investing in real estate is unique in that it offers cash-flow, liquidity, profitability, and tax and diversification benefits that other investments do not. If you’ve been thinking about how to build wealth for your retirement, you would be smart to consider investing in real estate. Diversification and Real Estate Investing
There are four primary ways to make money in real estate:
- Appreciation. When a property increases in value, you have real estate appreciation. Sometimes is happens due to changes in the market and other times it may be due to upgrades made on the property.
- Cash flow income (rent). Cash flow income is a nice perk of real estate investment that you don’t have in other types of investments. It is generated when you purchase a home or apartment building or an office building and rent them out.
- Real Estate Income. This is income earned by people who earn commissions through real estate transactions or buy property managers who oversee the operations of rental properties.
- Ancillary Real Estate Income - This can be a huge source of profit. Things like application fees, vending machines and laundry facilities are money makers that go beyond the monthly rent. Increase Your Bottom Line - Supplementing Rent with Ancillary Income
While there are certainly Risks of Real Estate Investing, there are a lot of benefits that outweigh the risks:
- Real estate is something that people who grew up lower to middle class are familiar with. They may not have been exposed to things like stocks and bonds, but they likely know the importance of owning a home. Buying a home is an investment that is reachable for them.
- Having an investment that you can see; something that is tangible, is psychologically important.
- You have the control in a real estate investment. You don’t have to worry as much about being defrauded the way you might when entrust your money to someone else to invest for you.
- You will reap the benefits of tax advantages.
- You can Leverage Your Debt to buy more real estate and increase your net worth.
Whether you are thinking of purchasing a home for yourself and investing in your own future by building equity or you are considering buying property to rent out, investing in real estate is great way to build wealth!
If you are in the market to sell or buy a home, let Sandra Nickel and her Hat Team of professionals assist you with all your real estate needs! Call them today at 334-834-1500!
Single family homes for rental purposes offer an excellent rate of return in an investment that most people understand better than other investments. The concept is simple: stay with predominantly owner-occupied homes in a slightly below average price range. In most areas, tenants are easy to find and they’ll usually stay two to three years or more.
It isn’t difficult to get into the real estate investing world. In fact, it’s rather easy. But it does require being smart and dedicated—and avoiding easy-to-make mistakes. These tips for a first time real estate investor should be beneficial in helping you become more knowledgeable and competent in sidestepping common pitfalls.
