The concept of investment has come a long way as people think beyond conventional options like shares, bonds, and precious metals.
Diversification is the mainstay of a successful investment strategy because it minimizes risks and maximizes profits. If you want to diversify your portfolio, consider real estate as an option.
In fact, you can boost your profit potential by investing in residential real estate. You can buy a home to live on, use it as a rental property, and resell it down the line. Further, there are several more reasons to add it to your portfolio.
Let us explain why residential real estate makes an excellent investment.
Store of value and returns
As an investor, you must look for safe alternatives that offer high yields in the long run. Residential properties are a perfect pick in this context because they work as a store of values and returns.
Statistics show significant growth trends in global markets over the years, and property prices rarely drop. Even the pandemic didn’t affect prices much, and the fluctuations were short-lived. Investing in residential property is the best way to keep your money safe and get a high ROI.
Another valid reason to invest in residential real estate is that it offers organic appreciation over time.
Factors like an increasing population, higher spending capacity, and relocation trends for businesses are responsible for the growth in demand for homes.
The prices rise correspondingly, and you can expect value-addition to your investment sooner than later.
Besides organic appreciation, you can do your bit to drive an increase in your property’s value.
Measures like putting in a fresh coat of paint, replacing the windows, fixing the roof, and adding solar panels can enhance its rental potential and resale price.
Nothing is better than diversifying your investment portfolio. The best thing about residential real estate is that you can diversify with multiple options.
You can check a single-family house for sale or look for alternatives like apartments, condominiums, villas, and townhouses.
Alternatively, you can buy a piece of land and build a custom home according to your needs and budget. Whether you want to buy a place to reside or rent, you can explore these alternatives and choose wisely.
Owning a home brings a sense of stability and security, as you need not worry about rent or vacancy.
You can even buy a second home and rent it out to generate passive income for the long haul. The good thing about passive income is that it works for itself, and you need not do more than maintain the property and find reliable tenants to make money from it.
You can even hire a property management expert to do the heavy lifting for you. Consider it a business that churns money for you year after year.
While you have to pay property taxes as an owner, you can still secure immense tax benefits as a part of the deal.
The rules differ from location to location, but most countries empower real estate investors with tax benefits.
You can receive deductibles such as depreciation, mortgage interest, cost of repairs and maintenance, cost of property management services, and property taxes from your rental income during the tax calculation.
A tax expert can help you understand these deductions and claim them while paying your taxes. You can imagine the amount you can save over the years.
Real estate requires a hefty investment, and most buyers fall short of funds. But the good thing about investing in residential properties is that you can get access to easy funding.
You can go ahead with the purchase once you have enough for a down payment because getting a mortgage for the rest is a breeze.
Lenders are ready to fund investors with a healthy credit score and a stable credit profile. You need not worry about a long and complicated process because most banks and lenders have simple steps to assess applications and approve loans for potential buyers.
As an investor looking to foray into the real estate domain, you should definitely explore residential properties. The option is great from a growth perspective, whether you want to use it as a home or rent it out for regular passive income.
Moreover, you need not stress about the security of your money because the markets around the world are stable and growing. Investing in residential real estate is the wisest move, and you should make it sooner than later.