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Home Ownership Preparation :: Investing Real Estate Opportunities
Investing Real Estate Opportunities:
Finding Opportunities By Investing in Real Estate
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Investing real estate opportunities has arisen as one of the surest ways to really increase your investment income.
In fact real estate and real estate investment trusts have outperformed stocks for over 25 years. Yes, the market may go down, and yes housing prices may fall. But in the end, real estate is the one thing that always goes up over time.
To learn more about how investing real estate opportunities are important to grow your personal equity, keep reading.
Real Estate Investment Basics
At least one third of all your assets should be in real estate. So if you're planning to buy your first home, consider that as a significant part of your investment.
The equity that you have or will have can be included as part of that one third.
Ideally, when looking for properties you want to look in area that appreciate quickly - meaning the value of your home will increase faster than if you had purchased in an area where housing prices are stagnant.
Tax Advantages of Real Estate Investment
There are some less direct ways that you can make money investing in real estate - there are, for example, important tax advantages.
For example, if you sell your primary home, the government lets you keep $250,000 of your profit tax-free. That means you can hold onto $500,000 if you're married.
On top of that, any interest that you pay on your mortgage for your primary residence is tax-deductible, making investing real estate opportunities some of the most lucrative out there.
Appreciation and What It Means to the First-Time Home Buyer
Yes, real estate seems to have dies in the short run. However, historically in the long-haul, real estate is one of the most consistent and reliable investments that you can put your money into.
With data tracked over the last 40 years, the National Association of Realtors has determined that real estate values have appreciated at an average rate of 6.3% a year.
For example, let's say you own a $200,000 real estate investment, and it goes up in value by 6% over a year. That's an increase of $12,000 in its value.
However, your down payment was only 10% of the cost - or just $20,000 - and a $12,000 profit on a $20,000 investment amounts to a return of 60%, minus taxes and service charges.
And yes, stocks or bonds may appreciate faster than 6% per year, but they'll never achieve a return like that.
Real Estate Investment Trusts
If you're not quite ready to buy your first home, you can still cash in on investing real estate opportunities with real estate investment trusts, also known as REITs.
They are the simplest way to add real estate to your portfolio without actually buying real estate.
You're essentially purchasing stock in a company that owns and operates real estate. Real estate investment trusts are publicly traded and typically involve a range of income producing properties.
In addition, they've outperformed stocks for the last 25 years and usually offer an annual dividend of around 7% higher.
If you don't feel ready to jump right into investing real estate opportunities themselves, try an REIT indexed fund instead.
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Home-Ownership-Preparation.com :: Investing Real Estate Opportunities