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Why invest in Real Estate

Since the US housing market bubble burst a few years ago, a lot of people have been wary of investing in real estate. But now is actually a great time for this use of your investments funds. Real estate prices are still relatively low (but beginning to rise), while interest rates are down as well.

There are still short sales and foreclosures to be had for much less than their market value, some of them in up and coming neighborhoods. If you are trying to decide whether to buy a rental property for investment purposes, here are some crucial factors to consider.

Cash Flow
Real estate provides almost immediate cash flow. Choose a property in an area that is desirable for renters – in a good school district, convenient to public transportation and so on. You may need to spend some time renovating or refurbishing your purchase, but once it is ready for occupancy, all you need to do is find the right tenants before you can start collecting the monthly rent.

Inflation
You will benefit from inflation. As inflation rises, so do consumer prices. This means that rental fees will go up, yet your mortgage payment will remain stable. You will begin to receive more income relative to your outgo.
You can take advantage of income tax breaks.

A number of expenses related to your investment property are tax deductible, including interest on your mortgage payments, home owner’s insurance and even travel expenses involved in maintaining the property. Depreciation may also be deducted.

You will avoid getting shut out of the investment real estate market. American housing prices are still relatively low at this time. This has led to a wave of foreign buyers who are purchasing US real estate as an investment. The demand from these purchasers is helping to strengthen the housing market and push prices back up again.

Mortgage
You get a chance to use the bank’s money. A mortgage is basically a substantial bank loan. Even though the bank, in effect, will own the majority share of your investment home for the time being, you will be the one who receives the rental income and benefits as the property increases in value.

You can take advantage of great opportunities. When you are buying a home to live in, you will likely be limited in scope. Your priorities will be a location within commuting distance of your work, a suitable community for your family and a house with facilities dictated by your needs such as a specific number of bedrooms.

Purchasing an investment property, you will not need to take this type of factor into account.  Instead, your concern will be return on investment. Even if you have a fairly low investment budget, you can buy a small condo in an area that is in high demand among singles and couples and receive a nice ROI.

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Grace Chen
Grace Chen - Writer & Editor
A graduate of the Haas School of Business, University of California, which is one of the top three (3) business schools in the U.S., Grace Chen has 10 years of experience in this field and have been delivering stellar business content through her written word. She’s the chief editor of Communicate Better and has written and edited thousands of content published in various online and printed media, including the NYSE-sponsored research studies and MEC Global. Connect with Grace on LinkedIn, https://www.linkedin.com/in/grace-chen-9254ab8/

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