Needless to say, real estate investment is one of the most attractive and robust long-term investment in the world today. With the right property, cash reserves, and a good neighborhood location, investing in real estate can prove to be a brilliant option. Furthermore, compared to other kinds of investments, it involves a significantly favorable reward and risk profile with relatively low liquidity.
Reasons to invest in real estate
Gain more leverage
Real estate is one of the best investment platforms that can boost your leverage significantly in the long run. Often, you get the opportunity to make down payments and leverage your capital. Hence, you are bound to realize an incredible return on your investment in the long run. Furthermore, using leverage to buy properties with substantial rental yields provides greater returns. Nonetheless, use of leverage involves risk. Hence, it is crucial to have a proper understanding of how leverage affects your real estate investment.
The list of the top reasons to invest in real estate won`t be complete without referring to it as an inflation-proof investment. Typically, rent increases with increase in inflation while the mortgage payments on your property remain stable. Hence, you will realize an increase in your cash flow without an increased expense for holding the property. Furthermore, an increase in inflation implies an increase in the number of renters since mortgage will become more expensive for the average consumers. Hence, an increase in renters leads to an escalation of rent.
Among the top reasons to invest in real estate is appreciation
Real estate has proved to be a great source of profit due to the boost in investment property value over time. It goes without saying that any rental property appreciates in value with inflation. Hence, an increase in value implies that sale as well as reinvestment in properties of higher value. Furthermore, a boost in the value will offer an equity line of credit that you can utilize for other investments.
Positive cash flow
Cash flow is the difference between your income and expenses on a property. Hence, whether you opt to buy using your money or use any other favorable financing that has a small mortgage payment, you will realize a positive cash flow. For instance, you will get a positive monthly cash flow when you subtract your monthly debt from monthly rent. Hence, you are bound to get a monthly income from your investment.