Is real estate a good investment? A question that perhaps is as old as time itself! The idea of investing in real estate is to eventually achieve financial freedom. But is real estate the way to go in this day and age?
The truth is, property investment is among the most common investments in the world. Why? Because of the potential return you can make each week, month, and even year! Let’s take a look at why real estate is a good investment.
Regular Passive Income
You may choose to buy a property to rent out for homes, offices, and even recreational purposes. Whatever you choose to buy a property for this purpose, you can earn a regular passive income that can either go into savings or be used for you to enjoy in the here and now.
Depending on how many properties you own, you could give up work to pursue a new career or hobby as you may be able to live off the incoming money from your properties!
Predictable Cash Flow
One of the perks of owning real estate is having predictable incoming cash at all times. Something needs repairing in your home? No worries! You know you’ve got a sum of money that’s expendable coming in within the next month. Having that safety net can really help with sudden unexpected expenses that sometimes crop up in life!
Big Profits
If you’d rather not have the hassle of dealing with tenants, you could choose to buy a property, renovate it to increase its value, and then put it back on the market to sell. Depending on how much money you’re willing to put into the property, you could make quite a hefty profit using this method! This means that you’re in some control of the value of the property and essentially in control of the profit you make too.
Another advantage of this method is the capital gains tax exemptions. This generally only applies to your principal place of residence (although not always), can only apply to one property at a time, and cannot apply to multiple properties.
But basically, because it’s a home that you own or one that you live in, you can actually get exemptions from capital gains tax which means when it comes time to sell your property and you’ve gained a lot of money through growth in that property, you don’t actually need to pay tax on that gain.
Safety Net
A great advantage is that owning properties means that you’ll never have to worry about being homeless. Sometimes even the best of landlords have to evict their tenants (even if they’ve not done anything wrong) to support their own financial needs. Owning your home and other properties means that you’ll never have to worry about a landlord asking you to vacate the premises.
Financial Freedom
That’s the dream, isn’t it? Not having to worry about moneyt is something everyone should strive for in their lives. Owning real estate can make financial freedom very possible! It might not happen immediately, but when you’ve paid off mortgages and you’ve got a regular passive income, you’ll eventually notice your savings growing and your worries about money disappearing.
One of the greatest things about real estate investment is that even though the property market might dip from time to time, the value of your properties will always grow. Therefore, if you’re sat on a property for many years, when you come to sell it, the value would have naturally grown even if you’ve not made any improvements.
Property Management Company
Many landlords choose to hire a rental property management company to take over the property on their behalf. This means they will communicate with tenants, arrange for repairs to be made, chase any late rent payments, and secure a deposit if there are damages left when tenants choose to move out.
Disadvantages
Finally, like with most things in life, real estate has its disadvantages too! You need to be careful of things like:
- Long periods of time with no tenants could leave you with no passive income
- Repairs that will need doing in your properties may be costly
- Tenants paying rent late, or partial payment
As you can see, the advantages greatly outweigh the disadvantages of owning real estate!