Is real estate a good investment? There are several tax benefits to owning a property, whether it is a home you live in, or it’s a rental property. Real estate can also provide you with the opportunity for passive income. Investing in real estate can help insulate you from the whims of the stock market. And finally, homeownership creates generational wealth for you and your family. However, not all properties are necessarily good investments.
There is a reason why the nation’s wealthiest families own multiple homes!!!
For real estate to be a good investment, it should have a great location, which includes being close to transit. You should have the ability to improve the home, and there should also be the potential for future development. And finally, your real estate investment should have rental potential (aka provide you with passive income).
Here Are Kim’s Top Four Reasons Why Real Estate is a Great Investment:
- There Are Tax Benefits to Owning Property
- You Have Potential for Passive Income
- These Investments Help Insulate You From the Whims of the Stock Market
- Homeownership Creates Generational Wealth for Your Family
There is a reason why the nation’s wealthiest families own multiple homes!!!
Check out Kim’s Video Answering the Question “Is Real Estate a Good Investment?”
In this detailed guide, Kim is answering a question that we get asked all the time. Is real estate a good investment? Well, Kim has been in business for almost 25 years and has sold hundreds of homes to folks in this time. We can pretty much say that 99.9% of them would answer the question “Is real estate a good investment?” with a 100% Yes!
Here are some tips and tricks of what we look for in investment properties for ourselves and our clients.
Is Real Estate a Good Investment?
Is real estate a good investment? I get asked this question all the time. Keep reading to learn not only what I share with my clients, but what I practice for myself!
There Are Tax Benefits to Owning Property
Whether you own one home or three, there are numerous tax benefits to owning property. For the first 10-15 years of ownership, your mortgage payment is mostly interest. And all of that interest can be taken as a deduction on your taxes.
When you own rental property specifically, there are even more tax benefits. This includes things like depreciation, maintenance costs, owners’ expenses, and much more. There are formulas used to calculate these deductions, so definitely have this conversation with your tax accountant when you are ready to buy a rental.
You Have Potential for Passive Income
What do we mean by passive income? Passive income is income you do not “earn” from your job. It is also known as income that requires low effort to obtain. In this case, we mean rental income. When buying a home, there is always the possibility of current or future rental income depending on what type of property you buy. We will discuss this more in a few minutes. Income from your rental property is a great way to add extra cash flow during your “go go” years, as we call them. These are the years where you are working hard and building up your career.
Then when you hit your “slow-go” or even “no-go” years. This is later in life when you are either working less or not at all. Having passive income from rental properties is a great way to subsidize your income from your 401k, pension, social security, or other alternative investments.
Speaking of alternative investments: Owning real estate also is a great balance to the whims of the stock market. This brings us to my next point:
These Investments Help Insulate You From the Whims of the Stock Market
Diversifying investments is the best way to shield your finances from any unexpected or extreme dips in the stock market. The real estate market and the stock market do NOT necessarily go hand in hand. Home values can be up when stocks are down; the COVID crash of 2020 is a perfect example. While the stock market was plummeting, home prices were on the rise.
Having your wealth spread across different types of investments like stocks, bonds, hedge funds, and real estate offers a scenario for overall lower risk and potentially higher returns.
Is Real Estate a Good Investment? Yes; Homeownership Creates Generational Wealth for Your Family
Having parents and grandparents who were homeowners makes it easier for younger generations to gain wealth. Homes can be passed down to younger family members. The equity can be used to help a child or grandchild make their first home purchase. And rental income or sales of investment properties can help amass more wealth for families in general.
Increasing homeownership in all communities gives folks the opportunity to build their own wealth. This can then be passed on to their children and grandchildren. Hence helping to create generational wealth.
Key Features That Make a Home A Good Real Estate Investment
As I mentioned earlier, I myself am always on the hunt for a good investment property. We did a separate blog with Tips on what to look for in an investment home here in Seattle. Here is a bit of what we shared in the post.
There are 5 key features I look for in a home to measure whether it will make a good investment:
- A Great Location
- Close to Transit
- Ability to Improve the Home
- Rental Potential aka Passive Income
- Has Potential for Future Development
Thank You for Joining Me As I Answer the Question “Is Real Estate a Good Investment?”
Is real estate a good investment? The short answer is yes, but here is why real estate is a good investment: First, there are many tax benefits to owning a property. Second, real estate can provide you with the opportunity for passive income if you have a rental property. Third, investing in real estate can help insulate you from the ups and downs of the stock market. And finally, homeownership can create generational wealth for you and your family. For a property to be a good investment, however, there are a few qualities it should have. It should have a great location and be close to transit. You should have the ability to improve the home, and there should be the possibility of future development. Your real estate investment should also have rental potential and be able to provide you with passive income.
If you think this Judkins Park Duplex is the right investment for you, you can find more information on our listing page here. Or you can always give me a call!
We are here to help. Our team understands that this process can take a year or two. And we are more than willing to give you a personalized plan to get the ball rolling. Feel free to contact us directly at thediva@teamedivarealestate.com or call/text 206-271-0264.
