There are several reasons that real estate is a good investment for people. Here are just a few of them.
Leverage
Real estate investors love leverage. Leverage is basically using other people’s money to control investments. This is great for real estate investors because leverage creates more profits for investors. The less money an investor has to put up for a property, the more money he/she makes. The less money the investor puts up, the less chance of them incurring a loss of money. Having lots of leverage is a win win for investors. Real estate investing is perfect for those seeking lots of leverage. You can control a lot of property with minimal funds out of your pocket.
Tax advantages
Tax benefits are another reason to own real estate. Investors don’t have to pay as much taxes on profits, as long as the property is owned long enough, compared to traditional businesses. You also have things like, 1031 exchanges, depreciation, and capital gains exclusions that make it a huge advantage to be a real estate investor.
Cash flow
There are several ways to get a constant stream of positive cash flow from real estate. Having a nice property and get you as many good tenants as you want, giving you a nice income stream with little work on your part. The flexibility that real estate investing provides can almost guarantee that you will have profits on a monthly basis, as long as the deal is done properly.
Amortization
Lenders love amortization. Real estate investors can too, especially if their tenants are paying down their mortgage for them. That’s leverage again for you. You may have made the down payment on the property, but the tenants are paying down that mortgage for you.
Increase in property value
Almost every property will increase in value over time. Real estate almost never goes down in value, not matter where you live. The longer you hold on to a property the more value the property has incurred and the more money in your pocket.
