Looking for a smart investment for your money?
If so, have you considered investing in real estate? Last year was the worst year the stock market has seen in a decade, and if you’re looking to get into the investing game, stocks can feel like a risky bet at the moment. At Abbey Mortgage & Investments, we’re proud to be a mortgage company that makes it easier for real estate investors to secure the asset-based lending they need with hard money loans. We’ve also put together this list of the top five reasons why real estate is typically a smart investment:
#1. It’s less volatile and provides better returns.
No matter how long you hold a stock, your risk never decreases, and there are several factors outside of your control that can affect your investment. With real estate, however, your risk decreases the longer you hold the property. And at first, your rental income may only be enough to cover the mortgage, but over time, your loan will diminish and your returns will increase.
#2. It provides you with protection against inflation.
Rising inflation generally hurts stocks and bonds, but investing in real estate is a great way to insulate yourself against it. That’s because the income you get from your real estate property will keep pace with inflation. Inflation can also increase the property’s value.
#3. It comes with many tax advantages.
Want to avoid paying Uncle Sam more than you have to? Investing in real estate opens up all kinds of tax benefits that you can take advantage of. You can deduct your property taxes and mortgage interest from your taxes (although the new tax law may affect how much can be deducted), and even property value depreciation. If you decide to sell the property, you can reinvest the proceeds into a new investment property in order to defer the capital gains tax.
#4. Its value will typically increase over time.
History shows us that the longer you hold onto an investment property, the more valuable it will be. While there have certainly been housing bubbles in the past that have hit home values hard, the housing market has a strong history of recovering. The key is not to panic and sell but to hold onto the property during the downswings in the market.
#5. It makes your portfolio more diverse.
Chances are, even if it’s just in the form of the 401k you have at work, you’re already invested in the stock market in some way or another. And if you’ve ever had the chance to sit down with a financial planner, nine times out of 10, they’ll tell you that your portfolio needs to be diverse. Investing in real estate is a great way to add more diversity to your portfolio, helping to mitigate the risks.
There are so many reasons to invest in real estate, and if you’re interested in becoming a real estate investor, it’s time to turn to the professionals at Abbey Mortgage & Investments. We’re Colorado’s go-to hard money lender, and we’ll help you find the right loan for your needs. Contact us today to get started.