Real estate investments have been popular in the United States nowadays. In a 2015 survey conducted by Bankrate.com to 1,000 investors, they have found out that 27% of American investors prefer investing in real estate instead of cash and the stock market.
According to these investors, the tangible nature of real estate offers them more security and stability than the intangible nature of stocks and bonds.
Here are the ten reasons why you should invest in real estate:
The value of real estate properties will increase over time. The data of National Association of Realtors shows that there is a 6.4% average yearly increase of home rates from 1968 to 2004, without single decline throughout the duration.
Real estate is a tangible investment – something you can see and touch. Unlike shares and bonds, you can feel more secured with real investments. You can sell these properties, build a house or develop it into a commercial property.
If you have children, real estate properties are great assets that you can pass on to them. It is a treasure that grows in value over time. Your children can definitely benefit from these real estate properties in the future.
Investors can also have greater borrowing power when using the property as security rather than using a share portfolio. Real estate owners can leverage to increase returns and build more wealth. However, an investor should understand the risk of leveraging and how it may impact their investments.
One of the greatest advantages of investing in real estate is that the equity of the properties will continue to rise. If you pay the home monthly, then you will also build equity in the home every month. If you have decided to sell the home, you will take more profits.
Real estate properties are great collaterals for loan applications. With real estate, you can be able to increase your principal loan. You will have greater borrowing power.
Basically, if you own real estate properties, you can be able to develop them into apartments, commercial properties and so on. These will be great sources of income. House for rent and commercial units are in-demand.
The rates of rents can escalate while the mortgage payments on properties remain stable. This will allow you better cash flow as there is no rise in expense for holding a property. Moreover, when the inflation increases, there will be more demand for renters.
Lenders are most likely to lend money to borrowers with real estate properties thank any other assets. They will lend a higher percentage of value, as high as 95% and with the lower interest rates than any other assets.
Real estate properties also benefit from capital gains tax. If you sell your home, you are no longer needed to pay any tax on the profit. Also, if you sell an investment property, you will only pay the capital gains tax on half of the profit.
These are just a few of the many reasons why you should invest in real estate.