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.

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Simple Ways to Save for a Down Payment

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For a lot of first time home buyers, coming up with the down payment and closing costs can be the most stressful part of buying a home. Whether you’re going with the FHA route with a minimum of 3.5% down, or the convention loan route with a 20% down payment, saving for a down payment can take time. Here are simple ways to save for a down payment.

Simple Ways to Save for a Down Payment

Check your progress

One of the best ways to save for a down payment is to check your current progress. This means you’ll need to get ahold of your finances analyze how you’re currently spending your income. For a lot of people, dining out can cost hundreds of dollars a week, whereas meal prepping at the grocery store could be a couple hundred dollars a month. Once you’re aware of how much you’re spending in each area, make a budget and check your progress every week. This will keep you on track on to meet your goals.

Coffee

Starbucks is so delicious, but it can add up over time. A $5 coffee every day of the month can cost you $155 a month just in coffee. And this doesn’t even consider the days you want to add a bagel in there too. Consider investing in a coffee maker and you can cut your coffee costs significantly. Additionally, a lot of workplaces offer coffee at a subsidized rate, or even free. Utilizing your resources can also save you a ton of money every month. Saving for a down payment doesn’t mean you need to get rid of things all together, it just means you need to modify how you do things.

Subscriptions

Subscriptions can add up every month, and we may not even know what we’re signed up for anymore. Go through you monthly bank statement and take note of all your subscriptions. Then go through and cancel all the ones you don’t use on a regular basis. It’s common for people to pay for 2 subscriptions of similar products such as music streaming. Chances are you aren’t regularly using both, so cancel the one you use less frequently. These services can give you $20-$30 back a month

Sell unwanted items

If you go to your garage, you’ll likely have a ton of items you want to sell. Try selling items one by one over Craigslist or Facebook Marketplace. You’ll be surprised how much you can get from a lot of little items adding up! Additionally, if you truly have a whole garage full of things you want to sell, consider putting together a garage sale to sell everything at once. This will help you make money, but will also help you clean out your garage!

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