Whether you're trying to get ahead of inflation or ride out the recession, you might be wondering where to direct your investing strategy. The cost of real estate is high right now, but you can still collect rent to cover your costs and make a profit.
You have many options when it comes to real estate investing. You can purchase a single-family home to rent and sell it when the value gets to where you'll make a big profit.
Another option is a commercial property with several units from which you can collect monthly rent from stores, hair salons, or small restaurants. A large or small apartment building will also afford you monthly rent collection from multiple units.
Are you looking at real estate trends and thinking about how you should structure your investing strategy? Keep reading to learn three great benefits of investing in real estate.
1. Cash Flow
Cash flow is one of the best investing benefits of owning real estate. Cash flow is what you have left from rent collection after you pay your bills. These bills include things like your mortgage payment, taxes, insurance, and repairs.
If you are able to make back your initial investment rather quickly by carefully managing your expenses, you'll see a positive return. This is a great way to generate cash flow and put money in your pocket.
Cash flow strengthens over time as you pay down your mortgage. You'll then enjoy the equity you've built up in the property.
2. Tax Advantages
When you own one or more investment properties, there are several expenses that you can deduct from your taxes. Things like your property taxes, mortgage interest, insurance, management fees, ongoing maintenance expenses, repair costs, and marketing costs to get new renters are all deductions you can take.
Realized gains from selling investment properties do not count as income. They are taxed as capital gains with a lower tax rate. Another plus...if you invest in opportunity zones, you'll pay less in capital gains. Opportunity zones are neighborhoods that would benefit from new investment.
3. Hedge Against Inflation
Inflation is the highest it's been in the past four decades. All the goods and services you buy are more expensive and the value of the dollar is shrinking. If you decide to invest in stocks, you'll need more money to purchase them because of inflation.
On the other hand, the value of real estate and rent increases as inflation increases. Real estate, therefore, serves as a hedge against inflation.
Benefits of Investing
Now that you know the benefits of investing in real estate, are you ready to jump into the market? Remember that will be ups and downs. Do the necessary research involved to ensure that you'll enjoy big returns. Investing in multi-unit buildings, single-family homes or commercial properties can boost your income if you do it right.
Do you know who can help you manage your California real estate investment properties? We at Blue Line Property Management work hard to provide you with the management services you need to manage and market your investment properties, screen tenants, collect rent, and handle property maintenance. Contact us today for your one-stop real estate needs.