Why Entrepreneurs Should be Investing in Real Estate Property

Entrepreneurs Should be Investing in Real Estate Property

There is no single entrepreneur who doesn’t want to have a steady and high stream of profit. But have you asked yourself what is something you surely need to invest in? If not, you should think about investing in real estate. You may ask yourself why you, as an entrepreneur, need to invest in real estate, and the simple answer is this: it is because it has a steady stream of profit and can be a lucrative investment option among others.

Read below for 4 insights on how you can jumpstart your real estate investment journey and 2 reasons why it is a good thing.

1. You Can Start Small — And You Should

Real estate investment entails sacrifice for both your time and resources and the best way to win in this financial arena is to start small. Think of real estate investment like climbing up a high ladder—you need to take one step at a time, and if you decide to skip some steps, you may fall down because you miscalculated your movement. The same is true in investments, whether in real estate or not.

You can start small by choosing some of the best starting points in a real estate investment down below:

  1. Real Estate Stocks
  2. Real Estate-Focused Exchange Traded Funds (ETF)
  3. Real Estate Crowdfunding
  4. House Hacking
  5. Parking Spot Investment
  6. Single-Family Home Investment

2. Reinvest Real Estate Income Into Multi-Family Units

If you already have a profit from your first and small real estate investment, you may reinvest your income into a larger investment like erecting a multi-family unit, also commonly known as apartments. Since single-family homes only house 1 family, hence the name, your profit will be much lower and slower compared to investing in a multi-family unit. Apartments are more expensive but are easier to finance, plus the fact that growing your portfolio is much easier and quicker, and property management makes sense.

3. Gain More Leverage

Real estate investments are one of the few investment vehicles that give you the ability to use a bank or other financial institutions’ money easily. But since leveraging involves debt, this may be unfit for others. But for those who want to take risks, gaining leverage is a way to boost your potential ROI or return on investment. You can gain leverage by either using the money from your pocket or through a mortgage deal.

4. Grow, Tax-Free

Taxes are simply confusing and can somewhat give you headaches or a party-ready smile at times. But did you know that you can get taxes to be your allies? Yes, you surely can. There are numerous strategies and methods on how you can defer or even completely avoid taxes. Here are some:

  1. Self-Directed Individual Retirement Arrangement (SDIRA)
  2. Health Savings Account (HSA)
  3. 1031 Exchange

You can use one or use them all. But make complete research to avoid any problems. You can also consult with an accountant to guide you out.

5. Increased Tax Deduction Strategies

Another good thing about real estate investments is that you could have tax deductions you would not have in other investment vehicles. Strategies to defer or even avoid taxes can also be a viable solution to reduce your taxes. But you should feel free to consult an accountant to help you. Here are some tax deduction strategies for you to check out:

  1. Usage of Depreciation Deduction - Modified Accelerated Cost Recovery System (MACRS)
  2. 1031 Exchanges
  3. Borrowing Against a Home Equity
  4. Deducting Mortgage Interests

6. Real Estate Investing is a Forced Retirement Plan

Since investing in real estate offers a steady stream of profit, you can certainly make it a retirement plan. If you manage to pay off your debts or reduce them to a low amount at an early age, you can even have an early retirement! But of course, the outcome of your real estate investment is within your hands.

In summary, your real estate investment journey is a journey of taking action and making wise and decisive decisions. The majority of us will never get rich overnight, so it is up to your decision, willingness, and perseverance if getting rich in a slow but steady and dependable manner is possible and achievable. Good luck!

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