This article weighs in on the pros and cons of investing in real estate. Real estate investing can be a significant source of profit for many people. However, there are some disadvantages to real estate investing.
It’s possible to lose your investment if you don’t know how to play your cards right. So, is investing in this lucrative field a smart move? Let’s examine the ups and downs…
Pros and Cons of Real Estate Investing: The Pros
You Have Direct Control of Your Real Estate Investment
Stocks, bonds and ETFs fluctuate often and investors have no control over them. However, this isn’t the case with real estate investments. When you invest in real estate, you can find the best deals, control costs, choose the tenants and decide when to sell. In doing this, you can be in control of most aspects of the investment process. As a result, you can have more autonomy over your investment and how much you make.
You Receive Monthly Income From Tenants if You Rent Out Your Home
A major benefit of investing in real estate is that after the rent gets collected and all the bills get paid, recurring income will be produced. Single-family rent growth increased by 12.6% year-over-year as of January 2022, according to CoreLogic. Moreover, there will always be demands for purchasing rental property. Hence, you can be comfortable with your asset since it fulfills a basic need.
Your Investment Appreciates Over Time
Real estate generally appreciates in value when held as a buy-and-hold investment. According to the Federal Reserve, the median sales price of houses sold in the U.S. was $188,700 in 2002. Over the past 20 years, the median sales price increased to $428,700, representing 127% in growth. This growth can vary depending on your home and location and isn’t guaranteed. However, if you do your research and choose carefully, your investment could appreciate over time and score you a substantial increase in property value.
You Receive Tax Benefits on Your Investment
Investing in real estate can lower your tax burden. You can deduct taxes on your rental property for several things. This includes property management and leasing fees, maintenance, repairs, property taxes, insurance, mortgage interest and owner fees. As a result, you can reduce your taxable income significantly.
Real Estate Provides a Hedge Against Inflation
Inflation is a hidden tax that can lower the value of your savings. Real estate, on the other hand, has historically appreciated at a faster rate than inflation. This is partly because investors see real estate as a hedge against inflation. As a result, its price is more likely to increase when inflation is …….
Source: https://investmentu.com/pros-and-cons-of-investing-in-real-estate/