As the U.S. economy continues to boom, many economic forecaster expect it to grow by more than 6% this year. This gives investors the opportunity to take advantage or the current real estate boom. Here are six reasons that it is smart to purchase investment properties.
Diversification of Wealth
Diversification is an extremely important concept for investors. When investors spread their money in different types of investments, they reduce their overall risk from different markets. Following the re-opening of society in a post-pandemic world, real estate opportunities are likely to expand in unique and high-demand ways, giving way to more varied opportunities with investment properties.
Demand for Rental Properties
According to statistics, homeowners affected by tough market conditions prefer to deal with individual landlords as opposed to investment groups when leasing property. This preference is due to the lax leasing requirements imposed by many landlords. We certainly see the single family build to rent trend growing as millennials and others rent in desirable areas where their housing preferences aren’t available for them to purchase.
Multiple Financing Options and Low Interest Rates
Interest rates are at historical lows but won’t stay that way forever. Rates could easily rise by the end of the year, now is the time to buy and lock in a low interest rate. By delaying, you could be costing yourself a significant amount of money in the long run. Consider that even a small jump from a 3% to 4% mortgage rate on a $200,000 investment means extra interest over the life of the loan.
Competitive Returns
Real estate can enhance the risk-and-return profile of an investor’s portfolio, offering competitive risk-adjusted overall returns. Because we’re in the middle of a massive property boom, many invested properties are certain to draw in some truly competitive returns for their investors, especially if they happen to have a huge degree of population demand.
Tax Breaks and Tax Shelters
One of the major perks of owning real estate is that it offers large tax incentives on everything from rental properties, apartments, industrial, and commercial buildings. Whether you’re an investor or a primary homeowner, there are several tax codes in place to help those who buy real estate. Mortgage interest and property tax interest can be deducted from gross wages, which helps make owning more affordable than renting. And since an investment property is allowed to be depreciated like equipment for your business, any improvements made can offset the miscellaneous income earned from rental receipts. For many investors, ownership offers significant tax savings, including tax sheltering. Investors can take their pick of several different tax break options including deductions, depreciation, passive income, capital gains taxes instead of income taxes, and more.
Creating Net Worth and Assets
Buying and investment properties now gives you an asset to sell later. After all, the only things renters are left with once a lease has expired are fond memories.
Building Residual Income
With all of the uncertainty surrounding the stock market, 401 (k)’s and other investment sources, more and more people are looking for places to invest their money. Investing in real estate now provides a nice nest egg for future use.
**Information in this article provided by Nitya Capital.
Nitya Capital is offering an online crowdfunding platform to directly connect investors to properties that meet many of these benefits, and all without third-party fees. All interested parties can visit the main website link at https://nityacapital.com/invest/.
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