The Benefits of Real Estate Investing
Investing in real estate and managing income properties seems like everyone’s dream job these days. In reality, not that many people opt for this path because, at the end of the day, it’s risky and challenging. I personally believe real estate investing does not have to be such a risk - as long as you know what you’re doing or you’re getting the right guidance, there’s nothing to be worried about.
When it comes to investing in real estate in 2021, I came across many people who had this written down on their New Year’s resolutions list but they never made the first move. Why? Because of doubts and fear that it’s not worth it. That’s what inspired me to put together these realistic benefits of real estate investing that will give you a clear picture of how valuable real estate assets can be.
#1 Land to Population Ratio
Let’s face it - the Earth is not getting any bigger. That means there will be no more land made in the future. This is all we have. At the same time, the human population is growing at an increasing rate. To narrow this down a bit, the immigration in Canada only has increased to 400 000 people per year. What I’m trying to say is that the demand for land and real estate properties is going to grow and the value of existing properties will grow along with it.
#2 Real Estate is a Tangible Asset
Unlike stocks, real estate is a tangible asset meaning you can touch it and it has intrinsic value. In reality, people are always going to need housing. We can’t say the same thing about stocks and other intangible types of assets. Don’t get me wrong, I’ve got nothing against stocks and other investment options. It’s just that real estate is the most stable type of asset to invest in. No matter how tough the times get, people are still going to need housing.
#3 You Can Control This Type of Asset
One of my favorite things when it comes to real estate investing is that you can control this type of asset. For instance, if you were to invest in stocks and buy shares of a company, you can’t just walk in their office and start telling them how to do their business. With real estate, however, you’re in full control of the property, meaning you get to decide how to renovate it, when to rent it out, and overall how to set up your cash flow income.
#4 Price Appreciation is a Thing
Over a certain period of time, the value of your property is going to increase. We call this price appreciation and it is one of the best benefits of investing in real estate. Think about it, by investing in real estate in 2021, you will be putting your money toward something that will eventually increase in value. That way, you can get a positive return on investment if you were to sell the property in the future.
#5 Properties Pay for Themselves
If you choose to invest in income properties with multiple units (preferably 5 or more), you will set yourself up for a great cash flow in the future. Think about it - if you’re collecting rent from 5 or more units, these income sources can be used to cover the mortgage and initial debt tied to the property. That way, the property will be paying for itself and you won’t have to go out of your budget to cover the mortgage.
#6 Cash Flow and Passive Income
Once your rental income pays off the mortgage, you will be left with a clear cash flow and some pretty impressive passive income. In that sense, real estate investing is considered long-term investing because, even though you can start collecting rental income as soon as you find the right tenants, it will still take some time to get to that pure passive income. However, you will be setting yourself up for financial freedom in the future and you will eventually unlock all the benefits of this type of investing.