real estate investment

How is real estate investment a good investing option?

Introduction

In the present era of development, investments have turned into one of the best ways to earn money. There are different business sectors where you can invest and expect excellent ROI. One such option is real estate investment. You can easily choose it to diversify the portfolio of your investment.

Generally, all investors choose multiple investment areas like stocks, bonds, funds, and ETFs. However, most of them avoid real estate due to some myths. For example, there are myths about the necessity of high investment amounts for real estate. Furthermore, people also fear the lapse of returns.

Here, you can go through some points that show why investing in real estate can be a good option. Try to plan for it if you have prior investing experience.

Reasons that project real estate investment as an excellent investing option

As an investor, you might ask yourself- is real estate investment trusts a good career path? Well, the answer depends upon your knowledge regarding the sector. Look at the reasons below to learn why investing in real estate can be beneficial. 

1. Presence of regular cash flow

You can expect regular cash flow while investing in the real estate sector. All you have to do is choose a top-notch REIT. If you do not know about REIT, consider taking an online course to learn all about it. 

REIT is broadly known as Real Estate Investment Trust. These trusts ensure regular cash flow every month. So, you would never face a monetary crisis while investing in it. Generally, these trusts finance (or own) real estate that generates revenue.

Moreover, you can get a job in the REIT section of the investment business with sound knowledge. As a result, you can still make money without becoming an investor. So, if you have a plan to work in this section, always check for the best-paying jobs in real estate investment trusts.

However, remember that you would need proper knowledge about real estate for a job in the REIT section. This level of knowledge should be similar to an investor.

Related Readings: 7 Mistakes to Avoid on Your First Real Estate Investment

2. Multiple investment types are present in real estate

Amazingly, you might end up falling in love with real estate investments as there are several ways of investing. There is no rule as such that an investor would have to buy real estate to invest. Instead, you can follow the investment approaches given below:

Go for a fix and flip investment: A fix and flip investment can provide outstanding returns in the real estate sector. Here, you need to purchase a dilapidated property and fix it up. Later, you can get a tenant and flip it accordingly. This can boost your income and lead you to revive your capital quickly.

Invest in the REIT: The REIT can help you get money without purchasing real estate. All you have to do isfind a credible trust.

Passing on the real estate: Passing on the real estate to the heirs is always a bold option for real estate investment. However, if you are older, you can pass on the property and ensure the cash flow remains intact.

3. Ease of leveraging investment

Leveraging the investment turns easier with real estate. You can easily invest a fraction of the money concerning the total value of real estate. In such a case, you instantly get the entire estate’s ownership. 

Now, all you have to do is search for a set of tenants and start getting monthly returns on your investment. Then, you can clear the loan and keep another part of your savings with an amount of this money.

So, you see that the real estate industry allows you to become the owner of a property while spending a fraction of its original price. Moreover, this type of investment can keep your credit score intact as you would have a regular income. Take a look at the case study given below:

Case Study:

Say you purchase a home whose value is $100,000. Now, you pay only $10,000 (10% of the net worth) for the first time. Then, automatically, the entire ownership of the house comes into your hand. Later, you get a tenant for the place and earn a monthly amount of $20,000. So, now you can pay $10,000 for the house and keep the other half as your monthly income/return. 

4. Easy efforts to increase appreciation

Improving a real estate’s appreciation is an easy task. You can execute with little investments only. Therefore, consider this another practical reason to invest in real estate. Remember that appreciation of your property can dramatically boost its worth.

Generally, all real estate in the US goes for 3 to 5% appreciation annually. However, with regular maintenance and luxurious add-ons, you can increase it to 10%. Now, it is a good deal as your ROI would dramatically surge up in some years. 

In some cases, major appreciation of real estate has boosted the ROI to 80 to 90% of the net worth of the property. If you are already into real estate investment, consider this to be the high time to increase the appreciation of your place. Of course, you can always start with adding interior paints or repairing the patio of your home. 

5. Real estate investment leads to tax benefits

You can enjoy multiple types of tax benefits while investing in real estate. Some of them are interest on a mortgage, maintenance expenses, depreciation, HOA dues, insurance premiums, etc.

Final Words

Real estate investments are one of the most happening investment options these days. Here, you can earn decent amounts being an investor or an executive. The only thing you would necessarily have is knowledge regarding the business process. 

I would always recommend you gather knowledge regarding the field; instead, look for how many jobs are available in real estate investment trusts. Then, expect to have a bright future as a real estate investor. 

Leave a Comment

Your email address will not be published. Required fields are marked *