When people are curious about whether to invest in property wonder if, is investing in real estate is worth it? It's a fair and important question to ask yourself, as the process can be stressful and difficult to navigate. You certainly want to know that any investment properties or real estate you buy be worth it in the end before getting into real estate investment.
To help guide potential investors in answering this question for themselves, you'll find several reasons why real estate investing is worth it or may not be for you. Knowing that can help save you a lot of time, money, and holding investment properties that do nothing but give you anxiety and regret this road.
Benefits of Real Estate Investing
There are several benefits to investing in real estate that can help potential buyers decide if it's worth it. While the advantages of real estate investments listed below are worthwhile, they aren't all the benefits investors may gain by having investment properties.
Real Estate Tax Benefits
Real estate investors have access to many tax write-offs and if running the property as a business, such as renting it out, you can write-off:
Mortgage interest paid
Maintenance expenses
Origination points paid on the mortgage
Depreciation
Homeowner's insurance
Real estate taxes
Before writing off any property investment items, be sure to consult with a tax advisor about your unique situation. Also, while many people look at stocks and bonds for investing opportunities, you can only write-off capital losses in specific situations whereas buying real estate gives you many more options.
Leveraging your Property
Real estate is a fairly unique kind of investment in that you can have the property without paying for it all upfront, being allowed to invest worth more than you have to invest. Unlike stocks where if you buy $15,000 worth of stocks, then you own that amount of stocks. With real estate, you can put down that money and, through a mortgage, have it as yours to continue to invest in.
This translates to taking a property that initially isn't worth much and building into being worth much more than it was. Also, as you pay the mortgage down, you hold more of the investment and can benefit from the natural appreciation that many properties accumulate over time.
Property Appreciation
As mentioned in the previous benefit, real estate offers appreciation in ways other investments don't. You can force the appreciation by making renovations, repairs, and following the guidance of a real estate agent familiar with the area where you have your property.
It's important to note that not all renovations increase your property's worth, so always check with a licensed appraiser or agent before investing in improvements.
Stability
Investing in stocks is risky and their worth can change in the blink of an eye. While the value of real estate can ebb and flow, in the long-term it's an appreciating investment and you won't lose everything if the market takes a dip. Also, a real estate investment allows for supplementary income and can give you monthly rental cash flow in lieu of selling the property when the time isn't right.
In these ways, taking the work to invest in real estate gives much more stability than other forms of investment.
Potential Drawbacks to Investing in Real Estate
The advantages to investing in real estate are substantial, but like all investments, there are some drawbacks that any potential buyer should be aware of.
Property Maintenance
Anyone who owns a house will tell you that property maintenance can be a big bill. This is even more true if you own larger properties and rent them as your investment, plus handling tenants. It's an ongoing cost that is unique to investment property.
Real Estate Market Fluctuations
This was mentioned earlier as a benefit, since property doesn't disappear when the market goes down unlike stocks, but the value of properties does ebb and flow with the market. On top of that, decreased demand for space, an oversupply of vacancies, your property being vacant for an extended period of time, not to mention environmental disasters can all affect the worth of your real estate.
Should You Buy Real Estate?
Now that you have seen some of the benefits of buying real estate as an investment and the potential drawbacks, do you think it investing in real estate is worth it? That is the key as it's a long road to securing investment property and a lot of work to manage, less so if you hire a property management company, but enough to where any potential investor must know this is the route they want to take for increased income or diversifying their portfolio.
Having a good guide can take a lot of the weight off your shoulders and help you navigate the loans, mortgages, and the potential pitfalls buyers face when looking to invest in real estate. Here at Goodale & Barbieri, we do just that. As one of the largest developers, property managers, and a leading real estate firm, we understand what to look for and the nuances of real estate investing. Since 1937 we've handled properties of all sorts and currently over 4 million square feet of commercial property. Discover more about working with experienced experts by following the link below.
