Pros and Cons of Real Estate Investing

Before you take the plunge into real estate their are pros and cons of real estate investing you should be aware of.

The idea of real estate investing originated way back in the 19th century but wasn’t very well formed until the early 1900s. Traditionally, investing in real estate, which was commonly practiced by people in their 40s and 50s, is now being undertaken by the youth as well.

The lucrative benefits of real estate investing are unknown to none due to which a large segment of the population worldwide is choosing real-estate investing for securing profits.

If you are here; you might be considering investing in real estate. Real estate investment can be greatly remunerative for you if you plan to hold on to a property for years. Additionally, real estate investment can add diversity, thereby, minimizing your overall investment risk. However, like everything else; real estate investment is not without its drawbacks. 

So, before you begin the process of investing in real estate, it is a good idea to get a comprehensive picture of the pros and cons of real estate investing. 

Here we have enlisted 4 of each! 

Real estate investing

PROS OF REAL ESTATE INVESTING

1] Offers a recurring income and ensures a steady cash flow 

Who wouldn’t like some passive income as they live on? Statistics state that 1 in 3 Canadians are renting their houses and enjoying a monthly recurring income consistently.

One of the most important benefits that come with real estate investing is the steady cash flow. The cash inflows derived by renting out your real estate property can be substantial. They can supplement your income greatly putting you in a good financial position. 

2] Appreciates over time

If you choose smartly; real estate appreciation is guaranteed. There are several factors that can impact appreciation like location, growth in the area, demand for houses in the locality, proximity to primary schools, workplaces and so on.

If you invest in an area that has the potential to grow; you can make huge profits. You can also refurbish your property, put some work into it and let this serve as a catalyst in the appreciation rate. 

Finding a remunerative property, however, is a tough task. You won’t just stumble upon it. Thus, having a professional real estate broker or a real estate agency by your side becomes impertinent as they are well-versed with the market and can judge rightly which property will get you the best profits. 

increased house value

3] Offers unique tax benefits 

The tax benefits that come with real estate investing are phenomenal. A real estate investment shields you against a portion of taxes. For instance, self-employment tax is not applicable for rental income, depreciation and lower tax rates on long-term profits. 

4] Provides an inflationary hedge

Inflation is an inevitable phenomenon that impacts the value of almost all of your investments. Inflation erodes your profits since the purchasing power of your money decreases with the rate of inflation. Real estate investments are not influenced by inflation since they keep pace with it.

Over the years, profits generated from most forms of investment tend to cut down with inflation, however, real estate being considered a hedge against inflation gains appreciation faster than inflation. Its price also boosts up in times of uncertainty as it is a safe form of investment. 

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