Investing means putting your assets to work so that you can increase your net value, enjoy additional income, have more funds when you retire, or save up for a child’s college tuition. In fact, once you have enough assets, investing is the only logical way of taking care of your growing wealth. However, when making a decision to invest, people usually face a dilemma: “What should I invest in?”
The stock market is likely one of the answers that most readily come to mind. Indeed, investing in stock can yield great returns – but it doesn’t come without its risk. If you are looking for a reasonable alternative to investing in stock – one that would offer comparable or better returns but without the volatility – the real estate market might be a perfect option for you. In this blog, we will consider 4 reasons to consider investing in real estate.
High Tangible Asset Value
The value of some assets will decrease over time. This can be true both of a stock – the market value of a company can drop rapidly and the company’s shares will plummet – but also of concrete things and items like, for example, cars. A house or land, on the other hand, will always have value. In addition, it is likely that a real estate property will steadily gain its value over time. And even though special circumstances or trends on the market can make the value of these assets drop as well, you can protect yourself from heavy losses with homeowner’s insurance.
Better Returns Than the Stock Market
It may seem counterintuitive to think that the real estate market provides better investment returns than the stock market, but this is what the data tells us. Since 2000, the annual returns on investment in the stock market averaged 5.43%, whereas real estate investment earned 10.71% annually. The reasons for higher returns from the real estate market investments are both appreciation (or the rise in value – currently, it averages 3% to 4% annually) and the income generated from renting out the property.
There are numerous tax advantages that come with owning a real estate property, especially if you own a rental property. In such case, you can deduct, for example, the interest portion of the payment towards the loan you took to buy the property. You can also deduct operating expenses, insurance, and depreciation. In fact, rental property owners are allowed to take tax deductions for any legitimate cost related to running a rental property.
Speaking of rental property, the rental yield – or in other words the annual rental income – is yet another financial advantage you gain when you own a real estate property that you decide to rent. Renting out a property is a great way of earning passive income – money that you earn without an active involvement.
Investing in Rental Property? Contact a Landlord’s Advocate
At Atlas Law, you will find a host of experienced, dedicated attorneys who can help you with all the aspects of property management, investment protection, and more. We can also provide advice related to difficult landlord-tenant relationships and represent you in litigation. Contact us today to experience the comprehensive legal care and assistance we offer.