Buying real estate as an investment can be a lucrative and satisfying experience. Unlike investing in the bond or stock markets, buying real estate as an investment enables you to use leverage by paying for a portion of the property up front and then having the balance and interest paid for by leasing or renting it out. In other words, you’d be buying property that eventually pays for itself. In fact, purchasing investment or income producing property is one of the most basic ways to invest in real estate, if not one of the oldest. Additionally, it generates income without doing much over the years.
Different Types of Investment Properties
For individuals who have above average DIY skills and sufficient patience for managing tenants, owning an income-generating or rental property can provide them with an ideal financial opportunity. With a one-time investment, you continue to generate income for as long as you own the property. However, it does require a substantial upfront investment and the financial savvy to afford maintenance costs and months when the property is vacant. If you want to diversify your financial portfolio, there are different types of property you can consider for investment purposes including:
- Airbnb and Vrbo – internet marketplace that connects rental property owners with individuals who are searching for accommodations in different locales
- Commercial income-generating properties – these types of properties are used for business-related endeavors or for providing workspaces rather than living space
- REITs or Real Estate Investment Trusts – are designed for investors who want to diversify their investment portfolios with real estate
- Residential investment or rental properties – real estate purchased for the purpose of generating income (e.g. apartment complexes, condos, duplexes, and single-family homes) fall under this category
For all intents and purposes, real estate is in an asset class all its own and one that many experts agree should be included in many investment portfolios. This is due to the fact that real estate usually doesn’t correlate with bonds, commodities, or stocks.
10 Reasons to Consider Investing in Real Estate
Although investing in real estate does come with certain risks and requires considerable research, it can be very financially rewarding. Here are the top 10 reasons to consider investing in real estate:
- builds capital
- generates passive income
- great return on your investment
- increases diversification
- leverages other people’s funds to purchase property
- long-term security
- protects you against inflation
- steady cash flow
- tax advantages
- you’re in total control
When investing in real estate, it’s always wise to work with a reputable mortgage broker like Granite West Funding. For more information about investing in income-generating properties, call us today at (559) 540-2275.