In this day and age, it is vitally important to plan for the future. It is particularly important to plan financially. Shockingly, approximately 42% of Americans have less than $10,000 socked away. Less than $10,000 is not what experts would consider long-term financial security. With the cost of living on the rise and an ever-increasing inflation rate, financial security is becoming more and more important. While $10,000 may be enough for short-term financial security, long-term financial security is best achieved through a passive income. The best form of passive income is investing and one popular choice is through real estate.
Instead of just putting cash in an account, actively investing allows funds to grow over time and build a larger reserve. With enough of a reserve, many individuals are turning to rental properties. Investors buy properties and rent them out to generate cash on a consistent, monthly basis. As mentioned earlier, financial security is important both short-term and long-term, which is an advantage of owning a rental property. As funds are available every month and over a long period of time, as long as renters are in the property, rental income provides both short and long-term financial security.
As investors do well in the short-term and continue to add to their funds, they are able to amass more and more properties. The long-term outlook for their finances becomes more and more promising as their passive income grows. To some, it even gets to the point where the passive income starts to replace active income. It’s no surprise that consistently real estate investing is the top choice, or one of the top choices, for individual and institutional investors alike.
Real estate investing offers four primary benefits. First, it provides an opportunity for equity growth and gives owners the opportunity to withdraw from that equity, if needed, and eventually pass their wealth onto their heirs. Secondly, real estate investing offers the opportunity for great appreciation, despite the short-term dips that sometimes occur. Third, as previously mentioned, renting provides an immediate cash flow. Finally, renting yields a large variety of tax benefits. Many expenses, such as those for property management, advertising, maintenance, travel, and insurance, are tax deductible. For instance, fees for advertising properties can be expensed and deducted and any travel to and from local or long-distance properties can be as well. The standard expense rate for travel is at 54 cents per mile as of 2018, allowing a great opportunity to reduce other costs with your passive income.
With all that in mind, real estate investing may be a great choice for you in order to build your security fund and gain long-term financial security. If those benefits alone aren’t enough, real estate investing is also one of the best ways to diversify. Even if stocks and mutual funds provide a good return, financial experts across the board will recommend not putting all of your available funds into one asset.
Lastly, real estate investing offers something very few other investments offer: tangibility. As the assets are fully-owned and abundantly physical, investors in rental properties are in control. No matter how the market turns or what trade wars will be going on, real estate assets have an intrinsic value that can not be depleted.