When it comes to investing, there are so many options in which you can invest. When people think of investing, they think of the stock market, your company’s 401K, mutual funds, and other investment options. However, real estate investing is generally one of the safer investments, depending on how you use the investment.
Whatever reasons you decide you want to try your hand at investing, real estate should be in the mix of consideration. Here are five reasons you should invest in real estate.
Property Appreciation
Property appreciation isn’t that you appreciate that you own the property. This use of the word means the increase in the value of a property. Many purchases of property depreciate as soon as you purchase them, such as a car. A car depreciates the second you drive it off the lot because it immediately has factors attached to it that decrease the value, such as mileage and previous ownership.
Real estate is not like that. Real estate property values increase (or decrease) according to the real estate market. While it is true that there have been severe downturns in the real estate market over the years, for the most part, if you can ride these downturns out with the property you own while possibly obtaining more properties for spare change on the dollar, you can make out well during those few and far between times.
If you are investing in a property you intend to flip and sell, then a slower or bottom market would not be ideal since you might get the property for a steal but may not be able to resell it. However, buying a property to use for passive rental income, buying low, and investing enough to fix any issues, then renting it out will be ideal. You can then wait for the market to heat back up and resell it (once the lease is up) for a nice profit. Or you may choose to keep it as a rental property collecting that sweet passive income.
Cash Flow Income
Speaking of passive income and rental properties. Cash flow income is, as mentioned before, using your purchased property or even buying already established rental properties for the sole purpose of renting out space(s) for continuous passive income.
The cash flow income can be more resilient if the real estate market takes a hit or crashes. These passive income properties can even sustain you through overall economic downturns or personal financial difficulties.
Real Estate Related Income
You may be thinking we have been talking about real estate-related income this whole time, and we have. Still, this particular use of the phrase refers to revenue generated from a real estate job-related source.
Real estate-related jobs could be a real estate agent or real estate broker, which gains their income from real estate sales commissions. Another real estate-related job is property management. This job entails running a property such as a building with offices, an apartment complex, or a hotel for an owner who wants to remain hands-off and have someone else manage their investments.
While this may not seem like an investment in real estate, if you do not own the properties yourself, these real estate-related jobs are an investment in your career and future financial stability.
Ancillary Real Estate Investment Income
When most people hear real estate investing, they likely conjure up the idea of owning real estate property and either reselling for a profit or using it as a rental property as a passive income.
Ancillary real estate investing is ownership of investments that generate income, such as vending machines, paid laundry facilities, ATMs, and other smaller businesses operated within more significant real estate investments.
Because these types of machines are in places that make them convenient, they can create a decent income due to the customers’ semi-captive nature. These types of real estate investments could be a great starting point for someone without a lot of capital to invest or without a lot of experience in real estate investing.
Your First Property Investments
If you have the capital for a down payment and the credit score to do it, you may want to consider purchasing your first real estate property through a mortgage loan. You can then use this property a few ways to get returns on your investment. You can make sure the mortgage loan includes money for upgrades and fix it and flip it for a profit, which will pay off the mortgage and give you a profit. Or you can use it as a rental property setting the rent to cover the monthly mortgage and yearly dues and property taxes along with padding for profit.
If you don’t have much-starting capital to invest in a property independently, there are crowdfunded investment groups. Each person in the group will invest a minimum amount, and the group will invest in a property and split the profits made through rentals or resale.
You can also look into the option of ancillary real estate options as they are often reasonably inexpensive to invest in and can gain you immediate profits from day one of placement.
Conclusion
There are many reasons you should become an investor. Using these five explanations, you should consider making one of your investment choices real estate. Though no investment guarantees, real estate can provide either a large lump sum or a stream of income through rental properties.
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