Most of us were taught a simple formula to accrue wealth. Make good grades in school to get into a good college. Earn a 4.0 GPA and graduate with honors. Find a company that offers you growth potential, and possibly seek an internship. Next, receive an offer of employment. Trade an hour of your time for an hour of pay. Or, trade 80 hours for a biweekly salary. Rinse and repeat until you retire. Does that sound about right? But there are other, perhaps more efficient ways, to generate wealth. Have you considered why you should invest in property?
Investing in property is a stable method for increasing your monthly income, and thus your overall wealth. When you invest in real estate, you generate earnings that do not involve you exchanging time for money. Your time is better spent seeking out the most lucrative markets and top-tier sites.
Investing In Property For Cash Flow
For our purposes, consider the following definitions of “invest,” courtesy of Merriam-Webster.
- To commit (money) in order to earn a financial return
- To make use of for future benefits or advantages
If you’re a freelancer or an employee, every hour of your time has a specific dollar amount attached to it. Your time has a particular value, assigned by the market. For every hour of work, you are paid that amount. To earn more, you can either work more hours or raise your salary. For most people, those tasks are easier said than done. But what if you could keep your time, and exchange something else? That’s what you do when you invest in property. You’re paying money to earn a greater sum over time. Yes, time. You’ll likely have to exercise patience. But you’re not punching a clock. You’re waiting on the seeds of your investment – your capital – to bear fruit – a return.
Investing In Property For Appreciation
Making an investment in real estate property increases value. And not only your financial value but also the value of the property itself. The value of your property will likely increase over time. You might hear the word “appreciation.” That’s what it means; the tendency of property to become more valuable with time. If you invest in a rental property, you’ll earn money from rental payments. Should your property be a business, you earn money from the profits the business makes. The longer you own a property, the more it will appreciate. The more the property appreciates, the greater your profit.
Investing In Property For Diversification
When most people hear the term “invest,” they think of the stock market. Investing involves shares and shareholders and brokers and the like. And while that’s true, it’s too narrow of a view on investing. Investing in property helps diversify your investment portfolio. Why is diversification important? Because having a portfolio of different investments decreases your risk. Stocks are one class of investment. Property is another class. If an asset in your portfolio endures a loss, diversifying keeps your entire portfolio from being affected by such a loss. Real estate properties are, on the whole, much more stable than stocks. As such, property investment will not undergo losses as frequently.
Investing In Property For Your Family
We mentioned that investing in real estate property creates a secondary revenue stream for you and your family. While that’s an admirable goal for any investor, that’s not the only way that investing serves your family. Residual income can (and does) change the lives of families. But did you know that you can pass your investment properties to your children? Real estate properties are tangible investments – something you can physically see and touch. You can create a will and stipulate that your property assets will have their ownership passed to your children. That way, they can continue to reap the benefits of your investment. Or, they might opt to sell the property, earning a sizeable fee in the process.
Investing In Property For Tax Deductions
If you live in a house and are currently paying the mortgage on it, you have scant options for tax deductions. But if you invest in a property, you essentially get to treat that property like a business. For tax purposes, the property is effectively a business. Any expenses you incur as a consequence of investing in a property are eligible as tax write-offs. For you, the investor, this means a lower tax liability and greater profits. Some of the tax breaks you might be eligible for are:
- Cost of commuting or traveling to your property
- Costs for upkeep, maintenance, and repairs
- Property tax deductions
- Deductions for segregating costs or depreciation
- Deductions for management services
Investing In Property For Retirement
What if your property investment could yield you a nice chunk of change when you retire? That’s what some people do. As you plan your retirement, consider selling your investment property. If you’ve owned the property for a considerable amount of time, you might reap a hefty financial benefit. This could help you further cushion your retirement cash flow.
Rely On Turnkey For Your Investment Needs
Now that you understand all the wonderful benefits of investing in property, what should you do? Go here to schedule a consultation with a Turnkey representative.