What Are The Advantages Of Real Estate Investing

If you are keen on building wealth then it is important for you to identify the right avenues for investing. Amongst the various options available, real estate investment is considered to be very attractive, profitable and time tested. However, on the other hand of the spectrum many investors are skeptical about investing in real estate after the massive financial collapse that occurred in 2008. There were thousands of investors who lost very badly and some of them had to even forgo their investments either partially or fully. So, where does the truth lie? What are the various advantages of real estate investing? For those who are keen on knowing the reasons as to why it makes sense to invest in real estate, the following few points could be interesting. It could help them to make the correct decision based on facts rather than based on opinions.

It Helps Improve Cash Flow
One of the biggest advantages of real estate investing is that it helps in enhancing cash flow. For example if you have taken a mortgage loan and invested in a property, you have to pay EMIs on a monthly basis. This is a fixed expense which you have to take care of. Hence if you are able to find a way to get some rental income out of this property, you will be able to make some profit out of it. This is nothing but the difference between the rental income and the EMI that you pay on a monthly basis. There are many real time investors who have positive cash flows running into a few thousand dollars on a monthly basis.

Inflation Adjusted Income
In most cases your mortgage repayment is fixed and even there are upward revisions they are not very huge and significant. On the other hand, the rental income that you get from your property can be benchmarked to the current inflation levels and this certainly will help you in more ways than one. Hence you can be sure that you will have continuous flow of income that is adjusted to inflation and that too for long period of time.

Advantage Of Leveraging
Another big advantage with investment in properties is leveraging. For example, when you buy a stock worth $20,000 you have pay the entire amount upfront if you want to own the scripts. This is not the case with real estate investment because in most cases you will be paying only around 15% upfront towards margin money. The balance has to be paid by way or mortgage loan spread over 25 to 30 years. Hence the leverage available is much higher making investments in real estate simpler, affordable and meaningful.

Capital Gains
Any investment in properties will most certainly add value over a period of time. This is particularly important from the long term perspective. There have hardly been any instances where real estate investments have moved into the negative territory. Therefore all real estate investments come with huge capital gains.
Last but not the least, the tax incentives available on real estate is also something that makes it an attractive investment proposition.
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