Did you know that the selling price of an apartment has skyrocketed by up to 147%? Now is the time to invest in the real estate industry if you’ve been looking for a passive income opportunity. Since selling prices are up, it only follows that rents are up too.
But enjoying the spoils from the real estate industry doesn’t happen overnight. You must first invest in a real estate venture that’ll pay you dividends periodically. You could also make direct investments in the industry through a crowdfunding platform.
Read on to find out why real estate might be the best passive income option.
Reducing Your Tax Burden
Paying your fair share of tax is an act of patriotism. But the government, in its wisdom, grants tax breaks to real estate investors periodically. Further, owning certain real estate investment property qualifies you for tax deductions.
Understand that the taxman factors in the depreciation cost of your property over its useful life when determining your tax obligation. The depreciation cost will help reduce your taxable income for a long time to come. Residential properties have a useful life of 27 years, while it’s 39 years for commercial ones.
It’s also possible to deduct other reasonable operating costs of rental property from your tax obligation. Don’t forget the 1031 exchange when you invest in real estate. It will help you defer your capital gains.
Value Appreciation
It’s very rare for real estate properties to depreciate. Their value keeps on increasing so long as you maintain the property well. External factors also play a significant role in increasing the value of real estate properties.
For instance, an improvement in the status/infrastructure of the area where your investment is located will increase its sale or rental value. Real estate investments are one of the most powerful passive income ideas due to the upward trajectory in their value.
Creating Funds for Another Passive Income Opportunity
Most people you see around would love to be millionaires, even billionaires. If you analyze most of them, you’ll find they have a single income stream. And they spend most of this income on recurrent expenditure, leaving little for investment.
Becoming a millionaire while living this lifestyle is almost impossible. This is unless your job position pays you generously.
Most people have brilliant ideas on how they can create additional wealth for themselves. But few have the funds to actualize their dreams.
Investing in real estate gives you an advantage. It allows you to accumulate substantial passive income over time. Once you have the funds, you can re-invest the money in other income opportunities to bolster your passive income.
This strategy can increase your net worth quickly if you do it right. Since real estate is a relatively safe investment, you could always re-invest your earnings in the same industry. This is an easy way to cement yourself as a key player in the investment circles.
Ease Access to Financing
How fast and the amount of credit you can access can significantly impact your life. Imagine stumbling upon a golden investment opportunity with impressive returns. But you don’t have enough finances to set it in motion.
How many people in your circle will be willing and able to bail you out? You’ll never know until you are in that situation. Why wait when you can make accessing credit a walk in the park for you.
Banks assess every loan applicant’s creditworthiness before they approve their loan application. When you invest in real estate, you have a tangible estate that you can use as collateral. Leveraging your investment makes financing readily available when you need it most.
Shielding Against the Effects of Inflation
There is a positive relationship between the demand for real estate investments and the country’s GDP growth. Rents will spike when the economy starts expanding after inflation because of the rise in demand. This means you’ll benefit from the higher capital values arising from this phenomenon.
You’ll maintain the purchasing power of your initial capital as tenants will have to bear most of the inflationary pressure. Also, the appreciation in the value of your investments will offset some of the inflationary pressure.
Earning Income Without Active Participation
Making money while you sleep can be a reality when investing in real estate. All you need to do is find a reputable real estate venture. Then sign all the legal paperwork and transfer the funds you want to invest to the venture.
The real estate venture will process your investment, and you will become an equity stakeholder. From this point onwards, you’ll start receiving dividends from the venture. Your money will work for you as you sit back and enjoy the profits.
In essence, you’ll be using other people’s expertise to make money when investing in a real estate venture. Going alone will force you to learn the ins and outs of the real estate industry, which is time-consuming. There’s no guarantee that you won’t make a mistake even after dedicating yourself to rigorous education.
Let the people who’ve devoted their lives to learning the real estate market run the business on your behalf. Channel your energy into other areas that you are an expert at.
Portfolio Diversification
Real estate has an excellent diversification potential. This is because of this investment’s low or sometimes negative correlation with other major asset classes.
Adding real estate investments to an existing portfolio, therefore, is beneficial. It lowers the volatility of your portfolio. A real estate investment will also increase your portfolio’s return per unit risk.
Boost Your Income With Real Estate Investment
It’s hard to survive on a single income stream in the current economic conditions. Luckily, creating a passive income opportunity is within reach of everyone. All you have to figure out is which investment will serve you better.
Real estate investments generate steady and substantial cash flows that you’ll find useful. Aside from the passive income, there are other benefits you stand to enjoy when you invest in real estate.
Start the journey today by contacting Memphis Invest Properties.