5 Reasons Why You Should Invest in Real Estate
Say you have $250,000 available for investment: How do you plan to use it? Stocks or real estate?
You can be trying to achieve financial independence or you might desire to retire sooner. What you should put your money in is a difficult question to answer, regardless of your aim. We believe that investing in real estate is the greatest option, but fortunately, both real estate and stocks have a track record of consistent returns and minimal risk that you can review before making your decision.
Here are 5 reasons why you should invest in real estate now!
1. Cashflow
Once operational costs and mortgage payments have been made, a real estate investment’s cash flow is its remaining net income. Cash flow generation is a fundamental advantage of real estate investing. In many circumstances, as you pay down your mortgage and increase your equity, your cash flow will only get stronger over time.
2. Tax Benefits
There’s no question, one of the big benefits of investing in residential property is that even if the rental income doesn’t cover all of the expenses, there’s still a tax concession to take the edge off. This makes the tax benefits of investing in property a huge allure.
When it’s the end of the financial year, everything you’ve had to pay out of pocket like loan repayments, council rates, and utilities – all that can be used to offset your taxable income.
3. Appreciation
The nice thing about real estate, especially in Australia, is that, as long as you have patience, its value is quite likely to increase. In the past 25 years, the Australian real estate market has grown by 412% and is still expanding.
The idea that a property would double in value every ten years is a prevalent one nowadays. Naturally, this does occur, but if you approach the real estate market with such expectations, you’ll probably be let down. Even still, earnings are significant over time, which contributes to the ease with which one may obtain a mortgage for a property because banks view real estate as a fairly safe investment.
What’s great is that, as long as your finances let it, any moment is generally a good time to invest when you have a strategy for investing over time. Never forget that investing over time is preferable to timing the market. What’s great is that when you have a plan for investing, you can do it whenever you choose.
4. Retire Earlier
One advantage of investing in real estate is that you can realise your ambition of retiring early and surviving only on rental income. You may get a substantial monthly income to live off of if you own several properties.
To have an after-tax stream of $60,000 a year, you’ll need to own roughly $2 million worth of real estate. You may invest in a home with a higher value, hold it for a while, and then sell it later and live off the capital gain. However, retirement planning requires advance planning, and this is not the most secure choice.
5. Leverage Your Current Capital
Once you have one investment property under your belt, using the straightforward strategy of leverage, growing your portfolio gets easier and easier.
Let’s say the value of your first investment property has increased, increasing your equity. After that, you can refinance the house and utilise your increased equity as a down payment for a new investment property. It’s a fantastic method to avoid the hassle of pinching pennies and accumulating money for a down payment.
