During tough economic times, it can prove challenging to find ways of investing your hard-earned money. However, failing to invest can prove a major blow to your savings as the effects of inflation bite into your cash over your lifetime. Therefore, if you are looking forward to cover major expenses such as college education and retirement, it is important to consider putting your present cash flows where it can generate some good money for you and investing in commercial and/or residential property is such one way. Reasons why you should invest in real estate include:
· Potential tax benefits
It is a dangerous strategy to consider buying rental property by speculating its value because cash flow is vital. You need to be more realistic by taking into consideration the long-term and employ a tax-deferred strategy. Because of mortgage interest deductions and depreciation, the cash flows will be tax-free. Most of the time, investors do not pay taxes on their cash flows and can wait until they generate capital gains at the point of selling their properties in the future. Furthermore, depending on whether you are a property professional or an active investor, there is a high chance your rental property will generate an overage tax deductions that can be used against other incomes.
· Housing market improvements
The property sector continues to improve according to the association of realtors. There are several many schools of thinking when it comes to investing in real estate, including ‘buying & quickly selling’ and ‘buying & holding for the long-term. Nevertheless, experienced investors engage a multiple of strategies, quickly turning over some properties, while holding onto others, depending on their financial analysis and the individual property.
· Active rental market
It is increasingly becoming tough to find rental units in many markets, which obviously spells good news for investors. The loss of many single-family residential properties to foreclosure over the last few years is evidence that the rental property market is becoming strong. Therefore, new constructions are required to absorb some of the demand. However, you need to realize neighborhoods conditions vary a great deal. Hence, it is important to consult a professional regarding local investment opportunities.
· Multiple financing options
Many of the home sales are often financed with cash, with investors accounting for the majority of these purchases. However, there are several other forms of financing property, including loans and mortgage financing. To get financing directly from a lender, you need to make a good down payment. In addition, you need strong reserves and solid credit.