Real estate is a fantastic way to diversify your profile and build wealth. If you are weighing the pros and cons of investing in real estate here are five advantages of real estate as an investment.
1. Tax Advantages
One of the most enticing aspects of real estate investing are the many tax advantages that come with it. For example, a 1031 allows you to completely defer capital gains taxes while you reinvest your proceeds.
2. Rate of Return
When compared to other kinds of investments, real estate has a historically high ROI for owner-investors.
3. Cash Flow
If you are looking for a way to generate passive income, rental properties are a great route to take. Once all the bills and maintenance fees have been paid, rental properties offer a stable and predictable source of cash flow.
4. Protection against inflation
There is a reason investors call real estate a “Hedge against inflation”. While the price of coffee and gas shoot up and the dollar becomes worth less, your property is more than likely to continue growing in value. Real estate prices have historically increased at a faster rate than inflation has increased.
5. Equity Buildup
The beautiful part of investing in a rental property is that your tenant is the one who is actually paying off your mortgage debt. Your equity grows immensely over time as your property appreciates and your mortgage is paid off from the rent you collect.