When you are planning your investments, it might be that you mostly consider investing in stocks and bonds. After all, they tend to give you back the highest yield on your investment, and while stocks can be risky in some cases, there are those that can produce a steady investment. You might also be considering investing in real estate – whether a rental property or flipping the property after renovations are complete. It could be a good idea in the long term to consider a rental property and here's why.
When you invest in an income property such as a rental home, you are pretty much guaranteed a monthly income. You don't need to sell your investment to see a significant increase in your return on the investment, and it produces steadily as long as you have people living in the home. It is possible to receive a profit from the property even if there is still a mortgage attached to the house depending on the amount of rent you can charge and the type of home you purchase.
Protection Against Inflation
When you have a rental property, it comes with a natural protection against inflation that can protect your asset. This is because its value will keep up with inflation and over time, inflation can increase the value of the real estate property you purchase. When inflation increases the value of the home or property you buy, it can actually help to reduce the mortgage over time. Stocks and bonds don't tend to carry such protections and will fluctuate greatly.
Tax advantages You Can Use
Real estate purchases have tax advantages that other types of investments simply don't have. For example, you can deduct the cost of the mortgage interest, your property taxes, if you sell the property you can defer your capital gains by buying another property, also, if you will the property to your heirs, they can sell it after you pass away without needing to pay any tax on the property's appreciation during the time you owned it.
More Control In Your Hands
You have more control over the overall value of your investment when you buy real estate too. You can buy a property that you know will appreciate faster than one in a different area or even buy more than one property – if you are able to, to increase your return on the investments. You can make improvements that will increase the value of the property over time and you can manage the homes yourself and not rely on a bank to do it for you as with other investments.