We are aware of the benefits of investing money somewhere, keeping plans and aspects in mind. According to Billionaire Andrew Carnegie’s famous saying, almost 90% of the billionaires increased or scored their wealth by investing in real estate. But is this true? Many types of research, according to the nine Advisors in the Oracles, have proven that the answer is a resounding yes. Investing your capital in a real estate or a property can eventually grow its value in the market and help you buy or get a house.
Apart from just getting capital to invest or buy a house, investing in real estate has numerous other benefits as well like tax advantages, leveraging house or property to build wealth, and cash flow, to name a few. Some of these benefits are mentioned in detail in this article. Read further to find out!
Cash flow is basically the total income that you get from investing in a real estate, after all the mortgage, payments, and operating expenses. In the majority of the cases, after you invest in a particular property, the cash flow only increases with time.
Tax deductions and breaks
Once you invest your sum in a real estate, then you develop the advantages of various tax breaks and other deductions to save money on tax. So all in all, you can reduce the cost of owning, managing and operating the property. Since, according to the law, cost of buying and investing in a property, is depreciated over time, (27.5 years for residential and 39 years for commercial), you will always benefit from the reduced tax deductions that will also lower your income tax.
If you have a house or a property, then investing in another one can add to appreciation through rental income and profits generated by any kind of business activity and purification regarding the property. Since the value of real estate or property increases with time, the return on investment will be huge.
Depending on the investment and capital, the returns vary according to many different factors like assets, location, management, class etc. The average annual return from half a decade Is 11%, and many are trying to beat this system and gain a higher return of the S&P 500.
Real estate Investment Trusts (REITs)
However, if you’re ready to make an investment, but aren’t looking to buy a house right away, then there are real estate investment trusts, which acts like stock exchange markets and you can buy and sell. They offer a 90% income to the investors and can quickly get into and out of the position. This is a good option if you’re doing it for the first time as they offer higher dividends than stock.
Although there are various ways of investing in the right place to be able to buy a house in the future, real estate investment is the best and the most secure option, despite its drawbacks like liquidity etc.