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This Is Why You Should Be Investing in Real Estate Right Now

May 14, 2021

5 min read

Opinions expressed by Entrepreneur Contributors are their own.

Invest in the property It may seem like the newest program to get you rich quick, but it has been making people rich for years. Leonard Stern from began in 1959 as an employee in his father’s pet shop. In 1966 he made his first investment – a warehouse in New Jersey. He’s filmed them since then from this investment in a company, Hartz Mountain, which owns over 260 properties. He has ventured into several other markets, all made possible by his . It’s worth $ 4.5 billion today.

For Stern, the investment in storage space has made it extremely successful in the real estate sector. While you usually think about buying houses when considering a property purchase, the options go way beyond that.

Connected: 8 ways to finance your real estate career

Real estate investment benefits

Real estate investments may seem complicated, but the benefits far outweigh any fluctuations in speed you might encounter. And the advantages are many:

1. . The building of wealth and financial freedom is accelerated by passive income. How Dave Ramsey Says, “Passive income is money that you make in a way that requires little to no daily effort to maintain. Some passive income ideas – like Leaving a property or blogging – it can take some work to get up and running, but they could eventually make you money while you sleep. “Passive income protects you in the event you lose your job and can even help you retire early.

2. Recognition. In addition to rent payments, real estate investors also earn money by increasing their value. recognition is the increase in value over time. Over time, the value of a property should increase, and rental payments can also increase. When you eventually sell the property, you will make a profit as long as you do your research and make a good investment.

3. Leverage. The use of various debt or financial instruments to increase the return on your investment is known as leverage. For example, you could only put 7 percent on your first property, but that investment gives you 100 percent of the property. You have wagered a small amount of money on a potentially high return. Real estate can also serve as collateral since it is a tangible asset.

4. Tax breaks. Real estate investments also offer great opportunities for tax deductions and tax breaks. If you deduct things from your income at tax time, you are asking for less income and therefore paying less tax. With real estate, you can pull off the cost of owning, managing and operating your property.

5. Profitability. This should be obvious: you can get serious cash flow with real estate investments. The money you have left after paying the mortgage payment and any operating expenses is yours Cash in circulation. You can set the rent to cover both costs and give you a good return – just be sure to keep the market in mind. When you pay back your mortgage, your cash flow increases, as does your equity.

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Real estate investment for beginners

There are several options for real estate investors, even for beginners:

FHA loan. FHA loans are a special type of loan that is supported by the US government. With this type of loan, you can get extremely low down payment rates – as low as 3.5 percent. They also enable you to have a lower credit score than other lenders. The condition for this type of loan is that you must live in the residence that you are purchasing. Many people use this type of loan to make purchases Build and do what is called “Chop house. If you live in one unit and collect the rent in the other unit (the loan allows up to four units), you can pay off your mortgage and earn cash. That extra cash flow can even make you want to invest in more real estate later.

Flipping properties. This is the case when someone buys a property with the intention of selling it quickly within about four months. We see this a lot with houses. A real estate investor buys a home that needs renovation, quickly updates it, and sells it for a profit. People sometimes too hold and resell Real estate in a fast growing market. If you have the time and money to quickly fix a home and monitor the market, this could be for you.

Investment in rental properties. Many people generate passive income by buying properties in high-traffic vacation areas and renting them out on websites such as Airbnb or VRBO. The key here is research, especially if you don’t live in the area. This method involves online real estate investing and a fair amount of analysis. You need to calculate potential revenue based on how often other rentals in the area are booked.

What’s great with this option is that you can automate most of it: hire a property manager, cleaners, etc. While this will negatively affect your bottom line, it is perfect for someone who wants a hands-off approach. Also, sites like the one above will protect you from destructive tenants, while renting an apartment doesn’t necessarily give you the same level of protection. If you have a bad tenant, he or she is there for a short time – unlike in a housing situation.

Connected: The 4 benefits of owning rental properties as a business

Real estate investments are often overlooked by new investors. However, real estate investments for beginners are very possible and can be extremely profitable.