InvestmentReasons to Invest Your Money in Real Estate by Chhavi Madaan January 31, 2022 by Chhavi Madaan January 31, 2022 149 viewsTable of ContentsAre you looking for a safe and dependable investment? Consider investing in real estate. You can make your money work hard for you by putting it to use in the real estate market instead of leaving it sitting in a savings account.While there are some risks involved, investing in real estate is generally considered to be one of the safest investments out there. With the right knowledge, you can turn it into a successful investment that will provide you with both long-term and short-term income.Qualities of Good InvestmentsBefore purchasing any real estate property, there are some important questions to ask yourself: Do I have enough ready cash? What is my time frame for making money from this investment? How likely am I to find a tenant? Is the land zoned for my intended use? Can I get financing if needed? What are the expenses involved in this purchase?The answers to these questions will help you determine which type of real estate investment is best suited to your personal needs. If you have enough cash on hand, are able to afford the expenses, and plan on occupying the space yourself, you are probably looking at a good deal. On the other hand, if you are working with limited financing options or cannot find tenants for your property, investing in real estate may not be right for you, at least in this instance.Common Types of Real Estate InvestmentsBefore buying any real estate investment, it is important to consider the different types of properties and what you hope to achieve with each purchaseResidentialIf you are building a home or purchasing a property for your own use, this may be the best choice for you. However, you will be responsible for carrying insurance coverage and providing any necessary maintenance or upkeep.CommercialIf you are looking to have income coming in on a property, this is likely your best choice. You can often find tenants quickly who are willing to pay rent each month. However, the downside here is that you will be responsible for paying your mortgage and carrying insurance on the property.Raw LandThis type of investment usually will not provide an immediate return on your money. However, if you are able to purchase land at a low enough price it can be used as leverage , which means that you may be able to buy the property using only part of your own cash . You can then borrow the rest from a bank or other financial institution.Lease OptionsIf you are not ready to make a large investment in real estate, consider entering into a lease option agreement . In this arrangement, you will purchase the property and allow someone else to occupy it under a lease agreement until they can legally claim ownership of it at a later date.Reasons To Invest In Real EstateSteady Cash FlowA major factor that makes investing in real estate so attractive is the potential for steady cash flow. If you decide to purchase an investment property, you will be responsible for paying off your mortgage and carrying insurance on the building.Great ReturnsDepending on the type of investment, real estate can provide an excellent rate of return. For example, if you are looking at a single-family home in a good school district for your child’s education, you may be able to sell the home one day for more than what you paid for itLong-Term SecurityReal estate is often referred to as one of the safest long-term investments. This quality is largely due to the fact that you are investing in something tangible – land, buildings and other physical assets . It can also be a relatively low-maintenance investment because it does not require additional income or business activity to net you money each month.Tax AdvantagesBecause the Internal Revenue Service (IRS) considers real estate to be a passive investment, you can write off your mortgage interest and real estate taxes against any taxable income you make from your earnings. In some cases, if you use a portion of your home for business purposes , such as a home office , you may also be able to deduct expenses for repairs or improvements to your property.DiversificationIn addition to earning a steady return on your investment , real estate can provide you with a certain amount of diversification . This means that it is a good idea to have money spread out across a few different types of investments. If you put all of your money into one type of investment, such as stocks, and the market goes south , you could lose a lot of money.Passive IncomeInvesting in real estate can provide you with passive income , which is money that you are able to earn even when you are not actively working. If you choose the right types of investments, such as commercial property or multi-family homes, they will provide income month after month whether someone is living in them or not.Ability To Leverage FundsTo purchase real estate, you typically need to put down 20 percent or more of the value of the home. However , if you are willing to put in some time and effort into managing your investment, you can often get someone else to finance for between 50 percent and 80 percent of the property’s total price. This allows you to use another person’s money to make the purchase while putting up less of your own cash.Protection Against InflationBecause the value of real estate tends to rise over time, you can protect yourself against inflation by investing in it. For example, if you buy a home that has four bedrooms and two bathrooms for $200,000 US dollars (USD) , but the same home sells for $250,000 USD 10 years later , your investment is showing an increase in value of 25 percent . This is a much higher return than what you would earn from a typical savings account.Chance To Build CapitalYour potential for earning money with real estate is directly linked to the amount of capital you have available. While it can take some time to increase your capital , over time it should grow as you continue investing . If you are patient and work to build up your net worth, you will eventually be able to use this wealth to make more money through smart investments.Fulfillment And ControlMany people who invest in real estate enjoy working with their hands. This gives them a sense of fulfillment and control over their investments , because they are able to physically see the impact that their money is having on societyConclusionIf you are looking for a more secure investment option, it is better to invest your money in real estate rather than other options like stocks or mutual funds. It is impossible for stocks or mutual funds to provide you with returns in 100% of the cases. However, when you invest your money in real estate, the chances that you will get regular returns are much greater than other investments. 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