Benefits of Investing in Real Estate
Most people are skeptical about investing in real estate, while others simply do not understand why they should even consider putting their money in this industry. Unknown to many, there are a number of benefits for one to invest in real estate, some of those reasons are highlighted in the article below.
Real estate consists mainly of capital assets such as land, which gain value over a period of time. In real estate investment, there is an expectation of an increase in the value of a property. A property's value will be way higher in five years compared to its present value.
In real estate investments, when there is inflation the value of the property increases thus higher rental returns. This is because an increase in the cost of living will see higher cashflows.
The rental returns from a real estate investment can be a steady source of earning for the property owner. The return, however, may vary from huge to small depending on the property's location as well as the market value. It is, therefore, important to avoid the vacancy of the property to ensure the reliability of the return.
The real estate value can be increased by the owner
A property's worth can be increased by developing it. For example, when a landowner drills a borehole or erects a building, the property gains more value.
Real estate leverage
The utility of various financial instruments or borrowed capital (for example, debt) to increase the investment potential return. A 15% deposit on a mortgage may get you 100% of the property you wish to purchase. Financing, therefore, is ready since real estates are tangible assets which can be used as security.
Independence in decision making
When one invests in real estate, they decide on how to handle the property in a way that is pleasing to them. For example, the investor decides who to be the tenants, what the rent to charge and who to manage the property.