Why invest in real estate? With so many investment avenues available, it’s a legitimate question. After all, you can invest your money in a variety of ways that requires little or no involvement.
So, why should you put your investment dollars in something that will:
- Almost certainly take a good bit of your time
- Force you, if you decide to rent out the property, to deal with tenant problems
- Leave you exposed to possible legal as well as financial troubles
- Have no guarantee that after your time, money and effort is spent, that there will be a profit
Why then, real estate? Learn how both long-term and short-term real estate investing can have substantial benefits.
Real Estate Investing for the Long Term
Historically, real estate has shown a consistent growth in value over the long term, even when some other investment choices were less stable. If there is an increase in value and you are paying down your mortgage balance, it’s pretty simple: You increase your equity in the property and add to your net worth.
The nice thing: if you have purchased the right property and maintained it properly, your tenants, in effect, make your payments for you!
In addition, tax advantages may be available to you when you invest for the long term in real estate. Although there are definite limits to these potential advantages, they can be substantial. Consult a tax or legal professional to see how your situation would be affected.
Real Estate Investing for the Short Term
In the short term, real estate makes a great investment simply because the numbers can be so large. It is not like buying a $200 watch and reselling it for $250. Yes, the return percentage will be high, but you still made only $50. With real estate, a decent rate of return can mean big profit dollars.
Continue reading through this section to learn more about the how-to’s of real estate investing: