I know a lot of entrepreneurs who would like to diversify their business profits. They don’t want their profits lying idle in their savings accounts. If you are one of them who is looking for an alternative place to put your money, pay close attention.
Seeing the title, it is clear I’m talking about real estate. But I’ll be honest;being an investor in real estate is not as glorious as you might think. But here are 5 major advantages that will make you think positively about investing in rental properties.
- Cash Flow
One of the main reasons why people think about investing in rental properties is due to the cash flow that comes with it. You know the extra cash leftover even after you have paid all your bills. This cash flow allows you to earn passive income every month. You can use this cash to reinvest in other properties or plan another business in the meantime.
The cash flow from rental properties is real and stable. Also, it is way more predictable than any other business. Entrepreneurs can rely on this cash flow to live on through the harsh times of their career.
- Tax Benefits
I don’t know if you are aware of it, but rental properties have benefits of their own.
Say, your friend earned 100 grand through a business and you earned the same from the rental properties you own, who can keep more?
Obviously you. If you didn’t know already, our government rewards the rental property owners. Not only is your cash flow from rentals subjected to self-employment tax, our government offers huge tax benefits like depreciation and comparatively low tax rates on the long-term profits.
- Loan Pay Down
When you are buying any rental property using a mortgage, the tenant of yours is actually the person who is paying the mortgage. This increases your net worth every month because your loan pay down on a rental property is basically a savings account, which grows on its own and you don’t need to deposit every month.
While your loan is getting paid, the real estate’s value usually goes high. I also know that recessions happen. The values will go up and down. And people often buy at the wrong time, as I understand it.
But over time, the values will go high, which is why no one comes here for a few months or years. This is a lifetime game. Like me, every real estate investor knows what we are paying for our properties now, and they will get much higher in next 20-30 years.
- Against the inflation
Inflation is a process of prices increasing due to the decreasing value of money. Ask your grandfather if he ever thought about paying hundreds for his shoes. He’ll say he didn’t when he was just a boy. But now you are doing it, right? Paying hundreds for a pair of shoes.
People fear the inflation in the real estate industry but guess what, when the value of everything increases, the property’s value increases too. And so does the rents.
So stop worrying about inflation.
For more info, please visit: Charles K. Carillo