That $20,000 you’ve got sitting in your bank account with a tiny interest rate will be worth less in five years after adjusting for inflation. Here’s the unfortunate thing – while it might feel secure just sitting safely in the bank, money that’s sitting idle will only get you so far.
That’s where smart investing comes in.
Thinking about investing in real estate? This can be a great option from a financial standpoint for a number of reasons.
A real estate investment allows you to create an ongoing source of income, and can also be a useful resource as you work to build your portfolio. However, it’s not a decision to be made lightly. You need to assess your situation and be sure that you are ready to take the plunge in order to determine whether real estate investing is a good course of action to help you build wealth.
The Many Advantages
Steady Positive Cash Flow
By purchasing a property that you can rent out, you will have a flow of monthly (rental) income. Cash flow from other businesses or ventures may be inconsistent, but with a rental property you have a regular, established source (and amount) of cash flow.
Lowered Tax Burden
As a property owner, the US Tax Code offers you many benefits. There are deductions for mortgage interest payments, along with depreciation expense. Other deductions may include utility costs, property improvements, property tax payments, and costs associated with insuring the property.
In the event that your expenses on the property are more than that of your rental income, you may even be able to deduct those losses from other income sources and reduce your total personal tax bill.
More Leverage for Wealth-Building
Once you have enough equity in your rental property, you can leverage it towards the purchase of another. You can either take out a second mortgage on your original property to secure a down payment on a new rental, or simply use your first property as collateral in the purchase of your second. Either way, the ability to leverage this capital can increase the overall return on your initial real estate investment.
Real Estate Values Appreciate
Property generally increases in value at a rate considerably higher than inflation. This means that your property investment can be a source of future wealth and can help you grow your investment over time. Ideally, you would buy “low” and sell “high,” but even if you don’t, most investors – as long as they’re wise with their initial purchase and don’t overpay – can expect to see a reasonable increase in value over time.
The idea of investing in real estate to increase wealth is definitely worth considering. Typically, it’s good to start small and think smart.
If you’re looking for a real estate investor loan, our expert loan consultants at TILA Mortgage can help you out and answer all your questions. We can help you be smart about your purchase and get a faster return on your investment.
As one of the finest and most experienced home mortgage companies in the Washington State region, we deal with everything home loan related. We enjoy walking alongside everyone – from first time home buyers, to established homeowners needing to refinance their mortgages, to new or seasoned real estate investors. Contact us today to start your loan application process and see how we can help serve you.
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*TILA Mortgage does not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. A debt consolidation may increase your monthly cash flow, but may increase the amount of your debt over a period of time by including the additional debt in your mortgage amount, which is financed over a longer period of time than the debt consolidated may have been financed. We encourage all consumers to do their own research, and examine their options carefully before selecting a particular course of action.