4 Reasons to Invest in Real Estate

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Increasingly, Americans are making the choice to invest in real estate over stocks and bonds. In multiple studies, U.S. adults feel real estate is the best way to invest money not needed for more than 10 years. Here are the 4 most common reasons to invest in real estate.

4 Reasons to Invest in Real Estate

Immediate Cash Flow

Many people buy investment properties for the cash flow. If you are able to buy a property, fix it up, and then rent it out, you can be making back more than you spent in the mortgage/repairs. Investing in real estate for the cash flow allows you to receive a rent check at the end of each month that you can use/save as you wish.

Tax Breaks

One of the top reasons to invest in real estate is the tax breaks that come along. Real estate investments can come with tax deductions on mortgage interest, operating costs, property taxes, insurance, and depreciation. Not only will you be sending less money to the IRS, but you will be increasing your cash flow over time by doing so.

Equity

If you make it a priority to pay off your mortgage, the amount of your home that you actually own will increase quickly. Paying more toward your principal can help you speed up the process. Additionally, the faster you pay your home loan, the faster you build equity, even if your home is appreciating at a slow rate. When choosing the loan terms, go for a shorter loan period if possible. When it comes to building equity, a 15 year mortgage is better than a 30 year as you don’t have to pay interest for those extra 15 years.

Vacation Home

Many U.S. adults like to invest in real estate to have a place to vacation a couple weeks of the year. For example, if you are 10 years out from retiring and have selected San Diego to be the place you want to move, consider investing in real estate now, renting in out via lease or Airbnb, and vacation there when you want. Then in 10 years when you’re ready to make the move down there, you’ll already own a lot of the property. This allows you to enjoy the property now and later, plus you’ll have purchased the house in today’s market without the inflation of the next 10 years.

You may also like: The Advantages of Buying a Home Vs. Renting

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