Investing your money is all about striking a balance between risk and reward. One of the best ways to protect the money you put into your investments is to diversify where that money is going.
There are a lot of misconceptions about investing in real estate. People often consider real estate to be too expensive for them or they see it as being unnecessarily risky. However, real estate is one of these smarter and safer Investments and you can make.
Here’s why investing in real estate is a smart move.
It’s All About Leverage
There’s not a lot of leverage that your dollar can acquire in the stock market. An investment of $15,000 in stocks only gives you access to $15,000 of that stock. Whether that stock goes up or down over time is beyond your control.
Real estate is a different game. A $15,000 down payment on a piece of real estate can ultimately net you $150,000 in real estate property. Unlike stocks, the value of your real estate is going to go up over time as you continually make payments and move towards ownership.
Appreciate Real Estate Appreciation
Stocks don’t naturally appreciate over time. This means that the value of your stocks changes based on the market, and not based on the stock’s becoming inherently more valuable. Real estate has a natural appreciation of around 3 to 5% every year.
The appreciation of your real estate can also be directly under your control. You can make renovations, improvements, and develop your property to increase its overall value.
Improving Your Long-term Cash Flow
Real estate can also start increasing your cash flow long before you fully pay off the property.
Whether you’re renting commercial or residential, you have the potential to rent out your property to new tenants. This is a way that you can get some monthly cash flow coming in.
There are a variety of companies that can help you with this process.
There’s a whole host of tax benefits that come with being a property owner. These are going to change based on your relationship to the property, but you can expect to have access to a wide range of benefits.
You can deduct things like the properties depreciation, interest paid on the loan, and even homeowners association fees. There are fewer tax incentives for investing in stocks than there are for investing in real estate.
Financial Security for Your Future
Real estate investments can be more resilient to the changes that can throw the stock market into chaos. Real estate is a great option for diversifying your investments and protecting your financial future. Contact Hard Money Lenders Arizona for more information.