5 Reasons to Include Real Estate in Your Investment Portfolio
Investing in real estate is one of the greatest ways to build a solid nest egg that will support you in your retirement.
It’s much more robust than investing in the stock market. You’ll own a piece of property that you can rent and sell whenever you see fit.
But, many people see investing in real estate as too risky and not worth the effort. They don’t understand the benefits.
In this article, we’ll explain five reasons to include real estate in your investment portfolio. Read on!
1. Build Equity and Wealth
Real estate investing has the potential to build equity and wealth in the long term. It is a physical asset that, when properly managed, can create passive income for the owner.
When you purchase a property, the initial investment will secure your ownership, and as the property increases in value, you can use that increase to build equity and wealth.
If the property increases in value, there is also the potential to rent it out and make passive income from rental.
2. Tax Benefits
Real estate investments provide some amazing tax benefits that make investing in real estate a great choice. Investors can deduct mortgage interest, real estate taxes, and any depreciation against their income on their tax returns. This can greatly reduce the overall amount of taxable income, resulting in a much lower total tax bill.
Additionally, real estate capital gains can be taken advantage of by investors. Properties that are sold for a profit can lead to capital gains, which are taxed at a lower rate than income taxes.
3. Inflation Hedge
Another reason to include real estate in your investment portfolio is an inflation hedge.
Investing in real estate is a great way to protect your assets from inflation. Inflation increases the cost of goods over time, but real estate often increases in value faster than inflation. Real estate investments that are properly planned and managed can provide returns greater than inflation.
4. High Tangible Asset Value
Real estate offers a safe and secure investment option with a high tangible asset value. The tangible asset value is the underlying property itself – as opposed to an intangible like stocks or mutual funds.
Real estate investments typically appreciate over time and can be leveraged to increase investments. When bought at the right time, investors can benefit from capital appreciation. For example, a home bought for $300,000 can potentially be worth $500,000 years down the road.
5. Security of Returns
The security of returns offered by real estate investments is one of the main reasons investors choose to put their money into this sector. Brick-and-mortar investments, as opposed to stocks and other securities, offer a tangible asset that can be held onto for long-term financial gain.
The stability of real estate is attractive to investors, as the value of a property is typically not subject to sudden and drastic changes like other investments might be.
Interested in learning more? Check out this area today and explore the possibilities of real estate investing!
Include Real Estate in Your Investment Portfolio Today
Real estate can be a great addition to any investment portfolio. With its stability and potential for growth, it can be a great way to diversify and add value to your financial plans.
Try exploring your own local market and learning as much as you can about it as a first step in planning your future property portfolio.
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