Investing in real estate is a safe way to achieve financial freedom. Discover the main benefits of investing in real estate today.
Before sharing the main benefits of investing in real estate, it is important that we talk about what investment in property is. In general, real estate investing refers to any investment that involves buying or renting property for the purpose of making a profit.
There are different ways to invest in real estate, some of which include buying a property, investing in a rental property, or constructing a building. Real estate investing is usually a great source of long-term wealth creation and that is why many people choose to do it.
Investing in property is an excellent long-term investment option because it can offer regular income throughout the year, plus it is very likely that the value of the property will appreciate over time and this will cause your generational wealth to grow over time. .
Investing in real estate can be very lucrative, especially if you manage to prospect a good investment property. That is why on this occasion we share all the benefits of investing in real estate from today:
1. Rental Income Stream
The reason why many people choose to invest in real estate rather than in another sector is precisely because of the passive income that this type of investment can generate. By acquiring a property and putting it up for rent, you will be able to generate profits even when you are sleeping.
One of the biggest benefits of investing in real estate is that it can provide you with another source of income in addition to income from work, even short-term rentals tend to provide you with even more cash flow, especially when investing in tourist destinations.
2. Properties tend to generate appreciation
Another important benefit of investing in real estate is appreciation. Appreciation is the increase in property value over time.
Historically, the value of a property can rise more than 10% each year and it rises even more when it comes to a vacation property due to the tourist gains in the area. Of course, the market is not the same in all cities, but in general terms, you can earn additional money when you sell your property.
It is an additional economic advantage that you will be able to see over time and that you should consider when buying a property as an investment.
3. Create generational wealth
One of the benefits of investing in real estate is being able to build capital. In general, investing in real estate is a great asset that works very well to build wealth, since it offers investors multiple incentives, such as cash flow, leverage, tax advantages and etc.
“Real estate has great appreciation potential. As such, it is an ideal asset to pass on to younger family members to eliminate any possible future appreciation of the owner’s estate for federal estate tax purposes.”
Jere Doyle
Senior Estate Planning Strategist,
BNY Mellon Wealth Management
Click the button below to read more about building generational wealth through real estate.
4. Diversification of your investment portfolio
As an investor, you need to have a diversified portfolio. Diversification basically means that you don’t have all your eggs in one basket. By spreading out the types of investments you hold, you’ll reduce risk and protect yourself from the volatility of any market.
Diversification aims to maximize returns by investing in different things that would react differently to the same event. Diversifying your investments generally provides protection for your portfolio because when one investment goes down, the other goes up, making it nearly impossible to lose all your money.
The same concept applies to real estate. Generally speaking, real estate is less volatile than stocks. Therefore, having the right mix of real estate in your portfolio can offer enough diversification to help offset the loss of a single investment.
5. It protects you against inflation
Inflation is the rate at which the general prices of goods and services increase; and as a result, the purchasing power of money falls. In the United States, the historical average inflation rate is approximately 3%. And in Mexico since October 2022, the inflation rate compared to the same month of the previous year was 8.4%.
It happens that as the price of things rises, so does the rental income that is obtained from the property and this means that property investors are protected against the immediate and long-term effects of inflation.
6. Investing in real estate gives you flexibility
One of the biggest benefits of investing in real estate is that it gives you flexibility. You can literally invest anywhere in the world. You can manage your properties and projects on their schedule and let them work on their own. This offers you the flexibility to set your own hours to manage your real estate investment.
Investing in real estate has no salary cap, so your earning potential can be unlimited.
In summary…
The biggest advantage of investing in real estate is that it can help you generate income and build wealth in the long run. The value of real estate generally increases over time and is a great way to diversify your investment portfolio. Ultimately, it is an asset to pass down to your children to build generational wealth.
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