Investing in real estate is a worthwhile endeavor if you play your cards right. It takes patience and hard work.
Rental properties are highly desirable for their ability to generate positive cash flow. This means after your mortgage and other housing-related expenses are paid off, you have extra profit. Lots of people are even turning their primary residence into an income-producing asset by renting out a bedroom or extra space.
A lesser-known advantage of owning real estate is using the property as leverage. By consistently paying down the mortgage you have the opportunity to tap the equity you have built up. Talk about the ultimate rainy-day fund! If you own multiple buildings or buildings with several units under one roof, you have the option to cash out at any time.
While not always, generally speaking, housing values tend to appreciate over time. That means the longer you own a property, the more it should be worth. This is why many people refer to a home or a piece of real estate as the ultimate nest egg.
Landlords have a few tax advantages over regular homeowners. They get to deduct items such as interest, insurance, maintenance, and even depreciation over time as business write-offs. Plus, when an investor sells a property and reinvests the proceeds into a new property, the person can defer all capital-gains taxes.
There are many ways to build your portfolio, however, from buying vacation homes, to commercial space, or land. Other possibilities include teaming up with partners and going in together on a big complex. If you are looking for something more passive, Real Estate Investing Trusts tend to produce similar returns to stocks in the long term.
The lure of owning real estate is pretty compelling. The goal for most is to achieve passive income from rentals. Of course, you can maintain your desired lifestyle through that income alone.