Why is a Real Estate Investment a Good Investment?
By infohub — Nov 29th, 2017
When it comes to investing in assets, investors have multiple options at their disposal. From equity shares to gold, investors can improve their net worth and increase their personal wealth through various avenues. But when compared to other asset classes, nothing beats the value derived from real estate.
Benefits of investing in real estate
- Real estate has a very high appreciation value
Assets like gold depreciate very quickly and lose value. Investing in them won’t bring any financial benefits. However, real estate appreciates over time, leading to increase in property value.
- Pricing is open to negotiation
Unlike traditional investments such as stocks and debentures, real estate prices can always be negotiated. Additionally, factors such as location, amenities available and future development prospects all play a vital role in determining prices, giving both buyers and sellers more freedom in quoting property prices.
- It’s extremely easy to invest in real estate
To invest in the shares of a company, you’ll need to get the required permits to deal in stocks and shares. If you’re corporate, you’ll need to be officially registered with the authorities to be eligible to trade. In certain cases, you won’t be allowed to trade by yourself and will have to use the services of a stockbroker. In comparison, real estate trading is much simpler.
- Interested buyers have a plethora of financing options
Pure cash transactions, mortgage loans, private equity loans, commercial loans, lines of credit, and FHA 203K loans are some real estate financing options that interested buyers have at their disposal.
Real estate sale and purchase is a highly lucrative trade for financing institutions and interested participants have a comprehensive list of financing options available to them.
- It’s a source of earning
If you are the owner of a real estate property, you can rent out the building and earn a passive income. This is especially beneficial to the retired, as it gives them a steady source of income during old age.
- Ownership of real estate gives multiple tax benefits
The Government allows property owners to write-off their real estate expenses as an investment, making them eligible for tax breaks. Additionally, any income generated through home rentals are exempted from income tax.
If sold, homeowners can even exclude a certain percentage of the sale value from being taxed.
- It isn’t subject to volatile fluctuations in market value
Stocks, shares, debentures, and bonds are subject to market performance. A rise in value today may be a decrease in value tomorrow, making them highly volatile. Real estate on the other hand, is an extremely safe investment and is steady in its appreciation.
- It will protect you against inflation
Real estate appreciates and when there is inflation, the value of appreciation also grows, making real estate the perfect hedge for inflation.
- It is easy to increase the value of your real estate investment
Home renovations, upgrades, remodeling, and regular maintenance are excellent ways to increase property values.
- It is one of the best assets to mortgage at a bank
Your stocks and debentures are hardly of any use if you needed a loan. Real estate comes in handy here, as it is one of the safest and most secure mortgages available.
- Demand is greater than supply
The number of buyers is greater than the number of sellers and the homes remaining on the market are few and far between. This makes real estate investment perfect, as sellers can now sell their property at very high values.
- It is one of the few investments that can be bequeathed
Legally, it isn’t permissible to bequeath stocks, shares, and bonds. Real estate, on the other hand, can be easily bequeathed to a loved one, making it a solid and safe investment.