Investing in real estate isn’t just for the rich and famous. Anyone can do it, even if you only have a small down payment. With the right preparation and research, anyone can enjoy the profits real estate offers.
Real Estate Investment is the new oil and the benefits of investing in real estate are numerous. With well-chosen assets, investors of real estate can enjoy predictable cash flow, excellent returns (ROI), tax advantages, and diversification—and it’s possible to leverage real estate to build wealth because the properties appreciate over time.
When thinking about investing in real estate? We have some facts you need to know about real estate benefits and why real estate is considered a good investment.
Cash flow is the net income from a real estate investment after mortgage payments and operating expenses have been made. A key benefit of real estate investing is its ability to generate cash flow. In many cases, cash flow only strengthens over time as you pay down your mortgage—and build up your equity.
If you invest in a buy-and-hold property, you can rent it out and earn monthly cash flow. Most investments don’t provide cash flow. At the very least, they may provide dividends, but you only receive them quarterly or sometimes annually.
Real estate investors make money through rental income, any profits generated by property-dependent business activity, and appreciation. Real estate values tend to increase over time, and with a good investment, you can turn a profit when it’s time to sell. Rents also tend to rise over time, which can lead to higher cash flow.
You can also force appreciation by renovating or improving the property. Whether you buy an undervalued property and fix it up to sell, or you renovate a rental property, you can increase the home’s value faster than natural appreciation occurs, giving you an even greater return on your investment.
Build Equity and Wealth
As you pay down a property mortgage, you build equity—an asset that’s part of your net worth. And as you build equity, you have the leverage to buy more properties and increase cash flow and wealth even more.
Real Estate Leverage
Leverage is the use of various financial instruments or borrowed capital (e.g., debt) to increase an investment’s potential return. A 20% down payment on a mortgage, for example, gets you 100% of the house you want to buy—that’s leverage. Because real estate is a tangible asset and one that can serve as collateral, financing is readily available.
Competitive Risk-Adjusted Returns
Real estate returns vary, depending on factors such as location, asset class, and management. Still, a number that many investors aim for is to beat the average returns of the S&P 500—what many people refer to when they say, “the market.”
It’s a Great Retirement Savings Plan
When you invest in real estate, it’s not liquid. You invest in it for the long term. As time passes, you earn more equity in the home. When you’re in retirement or near it, you can sell the property and use the profits to get you through retirement.
Many call it a forced retirement plan. You aren’t putting money away, but you pay the mortgage every month. If you rent the property out, your rent should cover the rent and other expenses incurred, which means you invest in your retirement without contributing money each month.
Talk with your tax advisor before you sell the property, though, so you can minimize your tax liabilities when you sell the home. Since it’s not a principal residence, you don’t get the capital gains exclusions, but there are other ways to reduce your tax liability.
You Don’t Need a Lot of Money to Invest in Real Estate
Many people assume they need a ton of money to buy investment real estate. You don’t. When you find the right property with the help of a property limited like Oneland Africa Limited, you’ll have an easy time getting a property while you spread the balance over time.
How to Invest in Real Estate
There are many ways to invest in real estate. The right method is the one that you are most comfortable with, and that provides the information you need to make a solid investment choice.
To get further information about Real Estate Investment, Visit our Physical office with address:
2, Pioneer Street Jakande Osapa London, Lekki Lagos Nigeria.
You can visit our website:
We are on every social media platform
@Onelandpropertiesltd on Instagram, Facebook, Twitter, and LinkedIn
You can reach us via the following contacts:
+234-901-069-1979 | +234-912-379-8662