Investing in real estate is a big commitment for anyone to make and yet it is one of the most stable markets to invest in. Many lose money regularly investing in stocks or cars that have a little definite promise of returning actual cash returns whereas properties whether buying for yourself or to rent out can often provide steady additional income. One of the trickiest concerns can be the location of the property. There are plenty of experts particularly in Halifax real estate that can help you make this decision though.
It is important to note that this is not a get rich quickly scheme though. Buying a property will make you money in the long run but you shouldn’t expect immediate returns. It is almost the opposite. Increasing the value of a property will always cost money unfortunately whether that be for building materials, labor, or construction.
Instead, you should look at this investment as the start of a business, especially if you intend to rent it out. You will be responsible for all of the outgoings e.g., repairs, call-outs, damages but also can balance this with the income of the property e.g., the rent or selling price.
As with any business, there are both risks and rewards, but ultimately real estate is something that you will always need in the world, so the sooner you can invest in the property market the sooner you can start making money. Below are some of the main reasons to get on the property market when buying your first property.
1. Market Value
The market value of real estate is one of the biggest attractions of investing in properties. It is exceedingly rare for the housing market to depreciate, generally. Despite the incidents of the 2008 crash, property prices have pretty much continued to rise through the years. As the population of the world increases so does the need for houses so buying one tends to mean that should you go to sell the same house, it will have gone up in value.
However, few people buy a property and do nothing to it. By adding to your property, you inherently increase the value. Whether this is through newer furniture and furnishings or the redesign of entire rooms. It has been reported that the easiest way to increase the value of your property is by redesigning the bathroom and kitchen.
One of the biggest perks to investing in real estate is the many ways in which you can purchase properties. One of the most common is through leverage or mortgages. This allows you to put up a lower percentage of the total cost of a property whilst a lender provides the rest. This is done with the agreement that you will pay the lender the remaining fee over years of monthly costs. This allows you to buy a larger property for less money upfront.
Along a similar vein to this, is that once you have the property, you can rent it out to not only pay your mortgage but make a tidy profit on it. Failing this, it is widely known that mortgages are often much cheaper than rent. If you are purchasing a place as a first home rather than a property to rent out, you will likely still save money. Again, the sooner you do it, the quicker you can earn those savings and stop paying someone else’s mortgage.
3. Tax Benefits
A title to grab anyone’s attention, tax benefits. When you own your property, you can deduct mortgage interest as well as state and local property taxes. This allows you to count the interest you pay on your mortgage against your income. Effectively, this reduces the amount of tax that you owe overall. It can even be taken on second homes as long as you remain within the limits.
Additionally, capital gain taxes, the tax you pay if you sell your investment or home, are usually lower than your tax bracket. A monumental advantage over other investment types. You can defer your capital gains from the sale of one property when buying another, meaning you aren’t taxed on all that money. What this is saying is that investing in real estate has great tax benefits and it is worth talking to an advisor to hear them all.
Your first property doesn’t need to be your dream home. As has been said above, by purchasing a property, you are likely to make money. This can be through rentals, savings, or attempting to sell the house after doing some work on it. This is one of the easiest ways to be able to purchase your dream home as you are continually investing in the property so that when you sell it, you have more money to place against it than what you would likely have from just saving your income.
You could even begin creating a portfolio of properties. Creating a mini-empire of properties will allow you to receive money from multiple rentals at the same time. Though of course, you will be responsible for multiple properties as well, which if luck does not go your way, could cost you a pretty penny as well. You will eventually be able to purchase the house you would like to grow old in.
5. Safest Investment Option
The Real Estate investment market is by far the safest option out there in terms of risk and reward. The market is considerably more stable than stocks and is less affected by world events. The pandemic drove many businesses into the ground as they could no longer operate in the same way. The housing market, on the other hand, remained relatively stable as people still needed homes. You have more control over a real estate investment and can instantly add value whereas you cannot do this in other investments. Ultimately, the housing market is also much easier to understand and so you can see where your money is going. Investing in real estate is a safe and stable bet.
Investing in Real Estate
Many experts will continuously say that now might not be the right time, but if the facts tell us anything is that there is perhaps never an ideal time to invest. The quicker you are involved in it, the sooner you will see the benefits.