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The Pro and Cons of Real Estate Investing: What You Need To Know – The Epoch Times

The outlook for the stock market and much of the economy remains uncertain. That being the case, many investors are looking for alternative spots to grow their portfolios. One of the best choices for a number of reasons is real esta…….

The outlook for the stock market and much of the economy remains uncertain. That being the case, many investors are looking for alternative spots to grow their portfolios. One of the best choices for a number of reasons is real estate. This exciting field offers benefits both obvious and less well-known that make it an excellent option for your money. But it’s not suitable for everyone. Read on for an explanation of the advantages and disadvantages of real estate investing.

Pros of Investing in Real Estate

Many folks are familiar with some of the advantages of investing in real estate. But unless you’ve taken a closer look, you may miss out on some less well-known but equally valuable benefits.

Multiple Ways to Make Money

Real estate investments offer numerous ways to make money, regardless of your strategy.

For example, owning a rental property doesn’t just make you money from the cash flow you receive each month after the property’s mortgage and bills are paid. It also quietly earns money from appreciation as the property grows in value over time. At the same time, you bank additional money each month when you make the mortgage payment. This allows tenants to pay down the loan’s principal.

Tax Advantages

Not only will you be able to deduct actual expenses required to operate and maintain the property, but you can also take a write-off for depreciation.

This on-paper expense costs you nothing out of pocket but can reduce your tax bill. When you sell the property in the future, you may also be able to take advantage of lower tax rates on capital gains. Alternatively, you might defer taxes entirely by buying a similar property in what’s known as a 1031 exchange.

Protects Against Inflation

Inflation has been a major topic of discussion over the past months as prices continue to grow across the economy. These conditions are ideal for holding a tangible asset like an investment property.

As prices go up, the value of your property tends to increase as well, helping you avoid much of the pain of inflation. At the same time, you’ll be paying back your loan in “cheaper” dollars, generally at a long-term fixed rate. As rents and other income grow over time, your mortgage payments will typically remain the same, improving your returns.

Diversifies Your Portfolio

All too often, people have their whole nest egg invested in the stock market, bonds, or similar financial instruments. This means that they’ve tied their long-term wealth entirely to these financial markets.

Real estate investments …….

Source: https://www.theepochtimes.com/the-pro-and-cons-of-real-estate-investing-what-you-need-to-know_4661821.html

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