by 4TH&AVE Team

Investing, TipsNovember 20, 20200 comments 0 Likes

9 Advantages of Investing in Real Estate

Are you considering investing in real estate or are you a new investor looking to learn more? As you may know, there are so many people who have had much success in real estate over the years. With so many ways to invest, it can be difficult to find your lane or identify best practices. As a result, it’s important to educate yourself before you choose to invest. The more you know, the better you can position yourself to win in real estate.

Here Are 9 Advantages of Investing in Real Estate:

1. Cash Flow – You get the holy grail of “passive” rental income. Checks come in every month.
2. Leverage – Bankers will line up to lend you money for investing in property. You can raise money through a syndicate of investors in your network. Or you can get a hard money loan. Either way, you can access capital to invest in real estate by leveraging other people’s money.
3. Amortization – Tenants pay off the debt. Whether you have a 15yr or 30yr loan, your tenants pay your mortgage every month with their rent.
4. Depreciation – The government offers you tax breaks for real estate because it goes down in value. Real estate can go down in value, but it tends not to. In reality, the reason why governments offer depreciation incentives is because real estate investors provide housing.
5. Creativity – The value of the property improves through your creativity. For example, if you buy a piece of raw land, you can change the zoning or use the land for farming or place solar panels on it. Or you can buy a distressed property, rehab it, and sell it. Or you can convert an empty lot into a parking deck. There are so many ways to invest in real estate.
6. Expandability – You can start by wholesaling, then expand to buying single-family homes, then expand to buying multi-family units, and then expand to buying commercial properties. 
7. Predictability – Once you define your niche and your systems, you can create predictability with your real estate. The process of renting and managing properties is simple, repeatable, and scaleable.
8. Tax-Deferred Money – There are many ways you can avoid paying taxes ever – legally. One way is known as the “1031 Tax-Deferred Exchange”. This allows you to reinvest your capital gains from your property into another property without having to pay taxes.
9. Appreciation – You get to watch your property value increase. Real estate is one of the few assets that adjusts with inflation. As inflation increases, so do housing values and rents. Because the dollar is going down in value, real estate tends to increase in value. Also, as our population increases, demand increases, which also drives up prices.

As you can see, there are so many benefits and advantages to real estate. Do your own research and learn how each of theses advantages and many others can benefit you on your journey to real estate investing. Understanding your options and creating a strategy around how you want to take advantage of real estate can position you to reap a lot of reward as an investor.