There are many people who have arrived to the conclusion that they have a need to start to diversify the profits of their business somewhere else except their savings account. If you also have similar thoughts then you also pay close attention to this article as it will help you diversifying the income. One of the best ways of diversifying your income is investing in real estate. Investing in real estate is not always amazing but it can be great way of building wealth over some period of time that too for the entrepreneurs. Here are some of the advantages which you can get from investing in real estate.
There are many people who are investing in real estate just because of the cash flow- all those extra money which have been left even paying all their bills. Cash flow can avail ongoing monthly income which is most probably passive and also allows you to spend your time building up a business or travelling or reinvesting in more real estate. Cash flow coming from real estate is quite stable and very much predictable as compared to that with other businesses. This is really great for those entrepreneurs who have ups and downs in startup life. Having good cash flow by investing in real estate can help you float through in bad times.
Here’s a simple question, if you are earning 50000$ from your own business and I am earning the same from rental properties who would get to keep more? Yup that’s right. I will be able to keep more as government rewards the owners of rental property. The cash flow received from investing in real estate is not subject to self-employment tax and along with that government is also giving other benefits like depreciation and also lower tax rates for long term profits.
Loan pay down
When you are investing in real estate using mortgage, actually your tenant is the one who is paying up the mortgage money and hence increasing your net worth every month. Today you must own 200000 on a rented property but next year you will only have 195000 as your tenant making and making you rich by 5000. Hence investing in real estate is really beneficial and you must opt for it if you are having extra funds.
When you are paying the amount of loan, the value of your real estate usually goes up. Hence you will always get benefitted while investing in real estate as you will earn a great profit. Yes of course recession do happens, sometimes prices do fall but eventually it will rise again and you will be in profit only. It might be possible sometimes that you buy at wrong time when the prices are really high and then you think you made a mistake by investing in real estate as you see the prices falling. But don’t rush into decision of selling it as prices are falling. Hold your horses and wait for the right time.