If you’re investing in only stocks and bonds and not real assets, you are making your portfolio quite vulnerable to market volatilities. This is why it’s important to have some real assets in your investment portfolio.
With an innate ability to increase value over time and little correlation to market factors, investing in real estate is a great way to diversify your portfolio and make it more resilient to risks.
Many investors and people in general think that investing in real estate requires deep pockets. While this is partially true, smart investors finance their investment properties with capital from commercial loans for real estate, and not out of their own pocket. This means if you qualify for a loan, you could easily invest in real estate, too, and here are 4 amazing reasons to do it.
Source of Steady Cash Flow
Owning real estate opens a reliable source of monthly income. Whether your investment property is commercial or residential, you can rent it out to tenants who will pay monthly rents either in the form of cash or check. As long as you take the precaution to avoid renting your property to tenants with a history of negligent rent payments or troubled relationships with landlords, you will have access to a source of steady monthly cash flow.
Long Term Financial Security
If you’ve chosen the right investment property, with a prime and thriving location and with excellent infrastructure, the value of the property will increase over time. The ability to generate steady and usable cash, and appreciate in value simultaneously is a feature that is not possessed by many other investment assets. Before you make a real estate investment, do a thorough inspection and research of not only the property, but also the location, and you’ll end up having an investment property that only appreciates with time.
Enjoy Tax Benefits
One of the biggest advantages of real estate investment is the tax exemption owners enjoy. Expenses that come from owning an investment property such as property taxes, mortgage interest, property insurance, management and repair costs, and cost for marketing the property to find suitable tenants can be deducted as part of tax benefits. Additionally, if you sell your investment property for more than how much you paid for it, the profit will not be taxed as income but as capital gains, which generally have lower tax rates compared to income tax. Further, if you invest in a real estate property located in neighborhoods in need of investment commonly known as opportunity zones, you will even be charged less in capital gains on sale of your property.
Cover Mortgage Payments
If your investment property has a really good location and has multiple potential tenants asking to rent your property, you could choose a tenant willing to pay a monthly rent amount that is more than your monthly mortgage payment. This way you can cover your monthly payments while having the remaining amount as spendable cash for covering expenses on other necessities.
With the right investment decision, real estate investment can be a great way to diversify your portfolio and get access to a stable income that can be much more than dividends from stocks and bonds. As long as you do your research on the property and primacy of its location, you can make a wealthy fortune from investing in real estate.
If you’re looking for a commercial loan in Dallas for financing a real estate investment, ProActive Lending is a private lending company that can help you with your financing needs. Speak to our financial experts and we will provide you with the right help.