Many entrepreneurs are attracted to invest in real estate because it yields better profits. Aside from this, there are other reasons why real estate is a good place to grow your money. However, be aware that you cannot get rich overnight in real estate. It takes years before you even savor the fruit of your hard work and patience.
Here are the reasons why investing in real estate is a smart choice:
- Gain more leverage. Investing in real estate is one of the few businesses beingfavored by many banks in granting loans. The loans can be used for down payment and leverage your capital, which can increase your overall return on investment significantly.
- The property appreciates in value. Over time, your property’s value can increase especially if it is built in a strategic location. As its value grows, you can create certain strategies to keep it tax-free or be subjected to a very minimal property tax.
- Tax-free cash flow. Cash flow is what you get from the rental payment less monthly dues (water, electricity, etc.). You know that the government doesn’t have any control over this which makes the cash flow all yours.
- Tax write-offs against your other sources of income. If you classify yourself as a Real Estate Professional and your ITR does not reflect a huge amount of income, you can qualify to get tax deductions that can be applied to your other income. This means that you will have lesser taxes from your other sources of income while you also have zero tax on the cash flow. This may sound amazing but you still need to consult a tax professional to make sure that you are doing it correctly.
- Increased tax reduction plan. The rental real estate is abusiness, therefore, anything that you spend in managing it can be deducted to your tax declaration and increases your tax benefits.
- Rental property is a wise retirement investment. This is especially true if you are going to retire without a lot of savings. If you have a property that can be leased, you are assured that you will be getting passive income every month which you can use for your daily expenses, medication (if you have any) and go to foreign trips.