These days, the average person knows much more about the problems that come with inflation. Everything around you gets more expensive, but your income does not grow at the same speed.
Luckily, there are ways to make your money grow with the annual increases in inflation. You just have to make sure your return on investment (ROI) is higher than the inflation for the year.
While you have many options for investments, real estate is among the most popular and oldest ways to invest. Generally, you can invest in land and wait for it to appreciate, you can invest in old properties and fix them up to sell for a profit, or invest in real estate to rent it out.
With the third option, you can use financing to buy a house, rent it out to have another source of income, and the property will also appreciate over time.
So, if you’re considering investing in a property and renting it out, here are five benefits that will take you all the way.
A Source of Passive Income
Whether you’re running a business or working a job, your source of income involves doing a lot of work. It doesn’t matter where you are, or how you do it.
While active sources of income are great and may make you a lot of money, you should have more than one source of cash inflow. Having more sources of income gives you more financial stability and independence. However, that doesn’t mean you should get more jobs or open up more businesses, you can use passive income methods.
With real estate rental, you can hire a property manager and even use guaranteed rent schemes to generate real passive income without doing any work.
Build Wealth
The purpose of making money is to build wealth so you can make even more money by doing far less work. By investing in real estate, you have a great opportunity to build wealth and equity.
By getting financing for the property, you can buy real estate with a small down payment and use the rental income to pay off the lender and other expenses of being a homeowner, such as getting an indemnity policy, with some income as well. All the while, your property will appreciate and you will be gaining more equity in the property as you pay off the lender.
Over time, you will own the property, its value will be higher, and you will still be making passive income. Along the way, you can look into buying more real estate.
Variety of Investment Options
When it comes to real estate, many people don’t get into it because they don’t think they have enough funds. What they don’t understand is that real estate has several options that you can choose from, some of which are:
- Land
- Single-family homes
- Duplexes, triplexes, and fourplexes
- Flats
- Multifamily properties
- Vacation real estate
- Distressed Properties
- Commercial properties
Even if all of these seem over your budget, you can look into financing or Islamic financing to pay a smaller downpayment and get your property. If you’re worried about missing instalments, you can look into guaranteed rent for landlord options given by property agents.
You can also look for fencing installation at your property to have a wonderful and eye catchy exterior.
Tax Deductions
By investing money, you will be making money through the investments and that usually means more tax complications.
While the rental income you make will be taxed, the benefit of renting your property is the large number of tax deductions you can enjoy. Moreover, you can also form a company and buy a property through it to get other types of tax benefits. To know which option is best for you, talk to a professional and plan your purchase.
