In today’s market, there is no shortage of experts claiming that they have the “secret” to building wealth. It seems as though every day there is a new hot way of garnering and building wealth and a new tool that is sure to guarantee great returns. However, there is one approach that has seemingly held the test of time and that continues to be one of the most trusted way to earn money: real estate. For years, today’s most successful investors have been buying and selling real estate as a way to take their money and turn it into even more money.
When it comes to today’s investment world, it seems as though there is no strategy that has endured the test of time quite like buy and hold real estate. For those looking to build wealth this strategy is without a doubt an approach to try. If you haven’t considered buy and hold real estate yet then it may be time to consider this unique and proven approach of earning a great deal of money from investments.
Passive Rental Income
One of the great parts of buying and holding real estate is that you can earn passive rental income on that property while you hold on to it and wait for it to sell. Before you invest in a property, make sure that you have thought about your potential tenants. How much do you need to charge them for you to make money off the property and cover the upfront costs? Can people in your area afford that? If you are able to charge rent for an income, you can expect to enjoy an annual return on investment of anywhere from 8 to 12 percent if you are doing things right and holding on to the property for the right amount of time. While you will make the big bucks once you sell, the passive income you can earn from renters is a great option to get you through until then.
Why is real estate such a great investment, especially real estate that you purposefully hold on to? Because real estate is an investment that appreciates in value. Think about when you buy a car, chances are it isn’t going to gain value over time. By the time you are ready to sell that car, it will likely be worth far less than when you bought it. This is because a car is an asset that depreciates over time. Typically, real estate investments will only gain value when you hold on to them, meaning the longer you have the home, the higher the value of that property will likely be. The goal of this type of investment is to hold on to the property until it reaches a certain value.
One thing that first time investors may not know about real estate investments is that it is not only a great way to build wealth, but you also get some great tax breaks for owning an investment property as well. If you are holding on to a real estate investment and renting it out, you can enjoy some great deductions. Another thing that investment holders may not realize is that if they are making a profit or loss on their real estate venture then they can start applying for benefits such as the ability to deduct expenses involved with upkeep and maintenance of a property. If you own a real estate investment and are conserving or managing it, then you can also deduct those expenses as well. Make sure to speak with your accountant about what types of deductions you qualify for, they can really end up adding up at the end of the year.
Keep these unique benefits in mind whenever you are considering investing in a piece of real estate. It is about more than buying a property and selling it when the market upswings, there is a lot that goes into this type of real estate investment and a lot that buyers can get out of the situation if they just have the patience to hold on to the property and rent it out until it is time to sell.