08. 7 reasons why real estate investment is the best option
No one would invest if they didn’t expect to make a profit. But potential returns are often not the only criterion. For many savers, peace of mind is just as important as returns. In other words, maintaining a controlled level of risk. Real estate has always been considered a safe haven precisely for that reason, combining an attractive return with a reasonable degree of risk. In this article, we explain why real estate investment can be the best option to invest in.
It provides stable income
One of the main advantages of investing in real estate is the generation of stable income through rentals. By acquiring a rental property, you can receive regular payments from tenants, which is a reliable source of cash on a month-to-month basis. This income is usually enough to cover property-related expenses and generate profits for the investor.
It protects against inflation
Real estate has the ability to protect against inflation. As prices of goods and services rise with inflation, so do property prices and rental income. This means that the value of the real estate investment and the income generated tends to increase in line with inflation, which helps maintain the investor’s purchasing power.
It allows portfolio diversification
We have already talked on the blog about the benefits of diversification. Many experts consider real estate to be a good way to complement traditional fund investments. By adding real estate to a portfolio that already includes stocks, bonds or other assets, the correlation between different assets can be reduced. This means that if one sector experiences underperformance, other assets can compensate for those losses. Diversification helps mitigate risk and balance potential returns.
It increases your wealth
Investing in real estate can increase your wealth in several ways. If you have taken out a mortgage to buy an apartment and rent it out, as you pay off that mortgage, your debt decreases and your net worth grows. In addition, the value of that property usually increases over time due to the appreciation of the real estate market and the improvements and renovations you make to it. This means that your net worth can increase as the property appreciates.
A stable and tangible investment
You know what we say around here: invest in something you can touch. Unlike alternative investments like startup stocks or cryptocurrencies, real estate investing offers stability and tangibility. Real estate is physical property that exists in the real world and has intrinsic value. This often provides a greater sense of security and control for investors.
It offers tax benefits
Real estate investment offers some tax benefits. Owners of a rental property can deduct property-related expenses and achieve annual depreciation deductions. In Spain, if the rented property is the tenant’s habitual residence, the applicable yield can be reduced by 60%: that is, taxes can be paid on only 40% of the yield obtained.
It allows to obtain capital gains
In addition to the income generated by renting, real estate investment also offers the potential for long-term capital gains. What does this mean? That, as the value of the property increases over time, real estate investors can take advantage of the rising price and sell the property for more money than they paid at the beginning.
If you think real estate investing is the best option but you’re not in a position to buy property, no problem. Through real estate crowdfunding investment you can access many of the advantages of real estate investment without the worries of having to manage a property, and without paperwork of any kind. With Urbanitae, you can invest in real estate developments throughout Spain from only 500 euros. Without expenses or commissions, and in a 100% online way. If all this sounds good to you, take a look at the Urbanitae website, it’s free!