Benefits of Real Estate Investment

Real estate is typically a great investment. It almost always appreciates in value. However, it should be considered a long-term investment. You may consider hiring a local real estate agent, such as a Smithfield VA real estate agent, to help you find great properties and experience their benefits.

Tax Savings

Did you know that investment properties help you with your taxes? Your mortgage interest and any repairs you make on the property are tax deductible. In addition, any time or travel required for you to check on or maintain your property is tax deductible. If you have hired a property manager, any fees associated with this service are also tax deductible. Your property can also be depreciated over time, which lowers your taxable income. You may also claim deferred capital gains.

Diversification

Any great investor will tell you that your investment portfolio should be diverse. Diversity lowers your investment portfolio’s volatility, especially when the stock and bond markets are moving rapidly.

Cash Flow

If you do not purchase your investment properties with cash, you will have to pay mortgage payments. However, if rent out your properties, you should receive regular cash flow. Rental income is typically close to, if not greater than, your mortgage payment. Therefore, you are gaining equity in your property that your renters are paying for. In addition, rent typically increases over time, but your mortgage payment should not.

If you choose to develop the property, you may earn business-related long-term income. You may also choose to subdivide and sell the land or build and sell the homes on the land, giving you real estate sales income that could pay off your mortgage many times over.

Leverage

Your real estate can also be used as leverage for purchasing other assets. You must typically invest 20% of the value of the property, which provides you leverage on a tangible asset. Then, you can then use your tangible assets as collateral on other properties or projects.

If you are interested in investing in real estate, find a reputable real estate agent to help you find the best, most profitable properties.