Real Estate Investing Benefits

Many reasons exist that conclude real estate investment is a safer and more profitable opportunity than other investments that arise. In this article, we will go over a few of the factors that make real estate investment a sound choice for your future.

Growing instead of Shrinking

There are many benefits in real estate investing opposed to the other available benefits. The first benefit of real estate investments is found when this market is looked on as a time line in comparison to the stock market. It is apparent that the real estate market has a growing line with no major fluctuations. On the other hand, the stock market has high points and valleys that range from quick highs to sudden drops through out its history. Although this market can be more profitable one has to worry about the various factors of risk that is found in this investment. It is harder to look at the time lines in other forms of investing (i.e. currency investing, mutual funds, buying gold and silver, etc.). But one thing is clear, no other market is as profitable with such a low level of risk involved as the investment real estate market.

Many people ask me, “Why is investing in real estate such a safe investment?” The answer is as simple as it is complicated. The quick answer is “God isn’t making any more of it” the more complicated answer is not so simple. Real estate investments are full of benefits for the investor. Along with these benefits some forms of risks are involved. This article discusses with you different factors that can make these risks more avoidable.

Government Tax Breaks

The United States government has setup multiple tax breaks for real estate investors including the very popular 1031 exchange. The textbook definition of a 1031 exchange is:

"A 1031 exchange or Like kind exchange is defined by section 1031 of the Internal Revenue Code. This code specifies that if an asset, usually some form of real estate (i.e. land or a building), is sold and the proceeds of the sale are then reinvested in a like kind of an asset. By this occurring no gain or loss is recognized, allowing the deferment of capital gains taxes."

The simple explanation is that as long as you reinvest the money you made from your real estate investment into another investment you don’t have to pay taxes on said profit. This makes a real estate opportunity a highly desired investment. No other form of investing gives you this much freedom with taxes.

Anyone Can Invest

Since real estate investing is so profitable and safe it allows for a large amount of amateur investors to entering the market everyday. Why else do you think all these infomercials are on late at night talking about the millions they’ve made overnight with someone’s CD set? I am not saying that buying one of those CD sets will make you a millionaire but they are good to learn the basics of real estate investing from. A large problem that arises with these CD sets is they teach making millions in real estate with bad credit or without spending a dime. This comment is a one factor which is highly exaggerated. Almost every traditional investment opportunity requires, you, the investor to have an excellent credit rating. In addition to an excellent credit rating, a good amount of money is needed for down payment with these opportunities; around 10 to 20% down. This is not the case with preconstruction real estate investments. Although the investor needs to be clear of past bankruptcy, a small amount is needed for the down payment on the property; usually this amount is around $2,000.

Other People’s Money

common inquiry is, “Why invest your money when you can invest someone else’s?” One of the big rules in real estate investing is, “If someone is willing to flip the bill, let them”. Banks are more then willing to give out a loan to buy houses. This is because unlike other forms of investing they have something tangible they can keep if you decide to foreclose. Banks are usually not as willing to give loans for stock or gold investing because the stock you invested in maybe worth nothing by the time you sell them. Banks are therefore making their decision for an investment with no guarantee; you could also take your gold and run across the border. Real estate, on the other hand, is almost always going to be worth something (often increasing in value every year). There has not been a recorded case yet of someone taking a house across the border.