With the numerous benefits that come with investing in a real estate property, it comes as no surprise that more and more people are going this route. If you’re thinking about making your first real estate investment, here are a couple of things that you need to know:
- There are 5 types of real estate you can invest in
- Residential
- Commercial
- Industrial
- Retail
- Mixed-use
The first two are the most popular.
Residential properties refer to houses, condominiums, apartments, townhouses, and vacation homes. The lease terms for a residential property usually runs from six months to one year.
Commercial properties, on the other hand, are office buildings and retail spaces that generate profit through rental income. In terms of leasing, commercial properties have longer lease terms compared to residences. Longer lease terms also lead to stable cash flow, reduced tenant turnover, and lower vacancy rates.
- Real estate remains the preferred choice of investors
Even in the midst of the pandemic, a Gallup study shows that real estate remains the top investment pick of Americans. This is borne out by numbers indicating that median house prices rose by 8% year on year. This should be good news for real estate investors – along with the announcement by the Federal Reserve that interest rates will remain near zero until 2022 to help stimulate the economy.
- Investing in real estate diversifies your portfolio
Instead of putting all your eggs in one basket, consider a variety of investments. A mix of assets – stocks, bonds, and real estate – means mitigating your risk. If one asset in your portfolio slumps, you can rely on the other investment vehicles to cushion your loss. A diversified portfolio is considered one of the most important components of achieving your long-term financial goal.
- Investing in real estate comes with tax advantages
There are tax breaks when you invest in real estate. For residential properties, repair and maintenance costs, property depreciation, and mortgage interest are tax deductible. Your capital gains tax can even be deferred through a 1031 Exchange.
Commercial properties have tax advantages as well. Some of the deductible items include your interest, depreciation, capital gains, and non-mortgage-related expenses.
- Marketing your investment property is a must
It’s not enough to list your rental property and expect tenants to come flooding in. In order for your investment property to be successful, it’s important to come up with a solid marketing strategy to attract your intended market.
Knowing who to market to and the area where your property is located are especially important.
Whether you’re a seasoned investor or a first-timer, it’s always best to have an experienced real estate agent by your side. For more information about Beverly Hills or Bel Air luxury real estate, feel free to call me, Sasha Rahban, at 310.963.9680. You may also send me a message here.
In addition, being the agent of choice for luxury buyers and sellers, I also have a wealth of experience in commercial real estate, property management, leasing, investing, and construction. I’m ready to apply the 360-degree perspective I acquired over the years to help you achieve your real estate investment goals.
