It can be hard to know what you should do with your extra money when it comes to making the right kinds of investment to set you and your family up in the best way possible for the future.
While you may believe that the only real way to invest in real estate is to own a home, there are actually many different options that you could consider. Other options that many people invest in is buying a second home to rent, purchasing an apartment building, an office building, or a multi-use complex.
So, if you are interested in why you should be investing in real estate, look no further! Let’s break down the top reason together.
It offers predictable cash flow
One of the most important reasons to consider purchasing an investment property is because it offers a predictable and monthly cash flow. Owning an apartment building or office building means you will have multiple tenants who use the building. They’ll be paying monthly rent which will, in turn, give you a steady cash flow to put towards the building’s mortgage, other expenses, and into your savings account or other investments
It appreciates in value over time
While investing in the stock market is always a great way to build passive income over time, owning an investment property is considered to be one of the safest places to put your money. The reason why is because real estate appreciates over time in a very consistent and lucrative way. While no investment is ever recession-proof, investing in real estate might be the closest thing to it. Real estate often remains strong even in the event of an economic downturn and often bounces back to previous levels of value after a recession has occurred.
You can actively improve its value
One great thing about real estate is the control you have over its value. Unlike a stock, in which you are basically at the mercy of what those in charge of the business do, you can take the value of your building into your own hands. Just like improving the kitchen, garage or master bathroom of your home can dramatically improve its value, so can updating an apartment building or office building. Not only will making improvement renovations to vacant units help you earn a higher monthly income from the new tenant, but it will also increase the value of the building when/if you do finally decide to sell it.
It coincides nicely with your retirement plan
When you purchase real estate, the cash flow of the property is lower and the principal reduction on the mortgage is less. However, over time, the mortgage is paid down and the cash flow increases. That means that when you are finally ready to retire years from now, the property will be earning its largest potential of income both in terms of cash flow, value, and the equity that you have in the property. Selling it off at the right time can set you up for your entire retirement.