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Reasons to Invest in Real Estate


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Now I know that many of you are probably looking at this confused, perturbed that we would even suggest such a wild idea during a housing market downturn. Right? I kid you not, there are various reasons to to invest in real estate at the moment. Before getting into the specifics consider these three reasons why you should. First off, by investing in real estate and purchasing a rental property will diversify your portfolio. Secondly, the benefits in tax alone is enough to get you started. The last one tends to be one of the most overlooked, especially by younger generations, which is planning for retirement. Though many of you may think that its not smart to invest in real estate, it’s time you took a look at how you could benefit from it.

(Photo credit to: ReallyToast.com)

(Photo credit to: ReallyToast.com)

Why Should You Invest in Real Estate?

As we started saying earlier, investing in real estate is usually the next logical step for any investor looking to truly diversify their portfolio. Before this though, they should definitely be participating in one of their company’s long-term retirement benefit plans. A 401(k) or IRA can do so much go for you, besides for diversification purposes.

When looking at the various tax benefits that accompanies investing in real estate, there are quite a few. You’ll even gain some leverage with a rental property investment as it’s the simplest to use the bank’s money on. If you can make the down payment, you’re able to sit back and increase your overall return on investment and leverage your capital.

Here’s another way the tax pot gets sweetened. If you are leveraging your capital correctly, you should have tax-free cash flow available. An investor rarely ever pays taxes on their cash flow and can wait for capital gains on the sale of their rental property years down the road. Also, have you realized that as a rental property owner, you’ve now gone into legitimate business? Any expense related to your rental property, whether its travel, renovations, etc are all tax deductible!

The last reason to definitely consider investing in real estate is its’ basically a forced retirement plan. Caring for and operating a rental property is a huge commitment. It causes us to kickstart our self-discipline, forcing us to constantly maintain the property with a long-term goal in mind. Rather than going into retirement apprehensive you will be absolutely grateful for maintaining the property as you did!

Will You Invest in Real Estate?

Well there you have it. What better reasons are there for investing in a particular market? You’ve got all those appealing tax free reasons in addition to a well diversified portfolio. Plus your older self will be thanking you for putting in the commitment to maintaining the property, giving you some foundation for your retirement. The problem with many of the working professionals currently is that their generation was always impulsive and lived in the moment. There was no method behind the curtain, no thought of the bigger picture. There are so many individuals going into retirement with almost nothing. Don’t let that happen to you!

What do you think? Are you going to try to invest in real estate?

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One Response to “Reasons to Invest in Real Estate”

  1. chitra says:

    Real estate offers competitive risk-adjusted returns, with less principal-agent conflict and attractive income streams. It can also enhance a portfolio, by lowering volatility through diversification. It is more stable investment.It is an asset you can use.

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