When speaking with some of the top investors in the world, you’ll often find that they choose to diversify their portfolios with real estate. Some turn it into a major side business with incredible returns.
“Ninety percent of all millionaires become so through owning real estate,” Andrew Carnegie, the billionaire industrialist once said. “More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.”
If you’re looking into investing or starting a business, you’ve probably heard that real estate is a great place to start. Most realtors say they wish they would have started sooner because of the flexibility and income potential. But what’s all the fuss about?
There’s Money In It
One of the biggest benefits is the earning potential. Whether you’re selling real estate as an agent and collecting commission, renting property, gaining equity to resell, or flipping rundown houses, people make a lot of money on their real estate investments.
One of the best ways to make money on real estate is to simply let the market do its thing and increase over time, which it always does.
“History continues to prove that the longer you hold onto your real estate, the more money you will make,” points out James Harris, star of Million Dollar Listing Los Angeles and contributor to Entrepreneur. “The housing market has always recovered from past bubbles that caused home appreciation to slip, and for those who held on to their investments during those uncertain times, prices have returned to normal, and appreciation is back on track.”
There’s no better way to collect a windfall than by waiting until the market has reached its peak, and then selling a great property.
There’s Less Risk
Real estate investors tend to experience less risk with their investments because the housing market is more stable than the stock market. Stocks are volatile, and even if the market is improving, the stock you’re investing in could plummet unexpectedly.
“When you invest in a stock or purchase shares of a company, you’re usually just one of many people who are being controlled by a larger system,” explains an article from the Houston property management company Green Residential. “Unless you own the majority of the shares, you won’t have much say over the outcome of the stock.”
“Investing in real estate is different,” the article continues. “You’re in charge of all the significant decisions and the processes to be followed for the purchase and sale, and/or the rental of the property.”
While it’s not totally without risk, you have much more control over your investments. You can leverage the property to collect multiple revenue streams, so even when the market is down, you’re making money.
There Are Great Tax Benefits
Real estate investors enjoy some of the best tax deductions around. They can deduct mortgage interest, cash flow, operating expenses, property taxes, maintenance costs, insurance, depreciation, appreciation, and potentially more.
If you’ve ever started a business, you know the value of taking deductions. Real estate offers them in spades, and you’ll save big come tax time.
You Can Be Choosy
The control over your investment is something many beginning real estate investors love. You can’t control interest rates and dividends in the stock market, but you can control the type and price of property you purchase.
This is a great asset because you can choose how to operate your property. It works with any budget and personality.
“What you plan on doing with the property should determine the area you buy in, the type of unit you buy, the state of the property, and all details about said property,” advises Pauline Paquin in a Huffington Post article.
“If you are not handy and hate to renovate, buy a new place or somewhere you can afford to hire out the renovation without tanking your operation,” Paquin continues. “If you want to rent to families only, buy a nice family home in a good school district. For young professionals, find an affordable studio or one-bed that is an easy commute from a dynamic zone of employment.”
Real estate could be your oyster if you choose to invest in it as a business. You won’t believe the freedom and income potential it provides, and it’s a great way to get started as an entrepreneur.