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5 Key Benefits of Investing in Real Estate

Are you looking for a new way to invest your money?

Real estate is one of the oldest and most reliable ways to invest money. It’s been around for centuries, and it’s not going away any time soon.

Investing in real estate can be quite lucrative. Of course, you’re going to need some money to invest in the first place. But if you have a small amount of capital, it’s possible for you to get started with real estate investing.

Keep reading to learn the five key benefits of investing in real estate for beginners.

1. Cash Flow

Real estate provides benefits that other investment vehicles can’t even touch. For example, you get a steady cash flow from your real estate investments. You won’t get that with many stocks and mutual funds, which don’t offer it at all.

And as a property owner, you have the luxury of being able to decide whether or not you want to lease an empty space in your building. You also gain control over how much rent is paid on each unit based on market conditions and tenant creditworthiness.

2. Tax Benefits

Investing in real estate offers unique tax benefits that you can’t find with most other investments. The government wants to incentivize people to invest in real estate, so they offer a bevy of benefits. They include deductions for depreciation, property taxes, and interest payments.

And if you ever decide to sell your property, you may be able to buy a replacement property and defer capital gains taxes.

Buying real estate can also help you avoid the alternative minimum tax (AMT). If your income is higher than average, AMT could apply. But by investing in real estate instead of stocks or mutual funds, you’ll reduce the risk of AMT affecting you.

3. Stability

One of the reasons to invest in real estate is its stability. Unlike stocks and other investments, the property’s value doesn’t tend to go up and down as much. This makes it a more stable investment for your money.

When you invest in real estate, you’re investing in something that has intrinsic value. People need a place to live, and they will always need a place to work. This means that real estate is a more stable investment than most others.

4. Portfolio Diversification

Investing in various types of assets is an important way to diversify. And real estate can be a great addition to your overall financial plan.

It’s wise to invest your money in different asset classes, including stocks and bonds, as well as commodities like gold or oil. But all these investments are still considered “paper assets.”

You’ll want to have a few physical assets in your portfolio, too. And real estate is an excellent choice in this regard because it’s something you can touch and feel.

5. It Can be Funded With a Thrift Saving Plan (TSP)

If you have a thrift savings plan (TSP), it’s possible to use this money for real estate investing. It allows you, as an employee of the government, access to buy stocks and bonds through your TSP account.

It may not be directly invested in real estate, but there are ways around that restriction. You can transfer the funds to a self-directed IRA, or you can borrow money from your TSP, which you would then use to invest in real estate.

Click here to learn more about the thrift savings plan for real estate investment.

The Benefits of Investing in Real Estate

A lot of benefits of investing in real estate, and these are just a few examples. If you’re ready to take the plunge into this type of investment, it’s best if you work with an experienced broker or agent who can guide you through the process.

For more information on real estate investing tips, keep reading our blog. We have a ton of great content to help you get started.

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