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Top reasons your next business investment should be in real estate

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There has never been a better time to invest in property, particularly due to the temporary stimulus measures which could save you thousands. There are so many benefits behind this sort of investment and with the correctly chosen assets, you can enjoy a regular passive cashflow, a diversification of your earnings, great returns and tax advantages. It is a great way to amass wealth while having a lot of control over the outcome. Other investments such as stocks, bonds or mutual funds can be unpredictable, and you are essentially a spectator with little control over what happens. With real estate you play a more active role where you can choose to increase the price of the property in ways such as a rent increase, lowering expenses and adding in extensions or other features to your house that would raise its value.

If you still want to invest in real estate but don’t have the time or know-how to do the above, consider alternatives such as Accuplan Checkbook Control which is a self-directed retirement savings account is invested in an LLC, that you have total control over. With this you can invest in real estate without having to operate, own or put up the finances for a property.

Before you begin your journey into real estate, there are a number of things you need to think about. After all, it is a big commitment and not one to rush into. Here are five reasons your next investment should be in real estate and what you need to consider.

Thing to consider before investing in a buy to let:

Factors beyond just the ROI –  When investing in a buy to let it can be easy to get caught up in focusing just on your ROI but it’s better to focus on a balance between the price and location rather than being fixated on the lowest price and highest return. Remember that the lower the price of property, it normally means the lower the calibre of neighbourhood or location. You want somewhere that encompasses all factors as it will be easier to sell and see potential growth over the coming years. You are also more likely to be able to fill it with tenants if it is in a more sought-after or convenient location.

Maintenance of your property – As a landlord you will be in charge of the maintenance of your property so it’s worth considering this when looking at the property you purchase. If you buy a newer build or if you buy somewhere old and do a renovation before you buy it, it is likely to be more expensive upfront but then cheaper down the line. You are less likely to have issues such as leaks or breakages leading to happier tenants and less unexpected costs for you.

Your budget – The property price is just one in a list of things you need to consider budget-wise for your new home. As well as the main cost of the apartment or house, you will also need to think of things such as maintenance costs, renovations, agency and mortgage fees, legal costs, landlord insurance and if you go through a period with no tenants in the property. As long as you put aside some savings and prepare for the above you will be fine. It’s worth creating a spreadsheet or using an accountancy software to keep control of your finances and ensure you know exactly where your money is going and how much is being spent.

Why a buy to let is a good idea

1 – Passive Income

Real Estate is a great source of passive income, meaning you can earn without having to actively do anything. Whether you are looking to invest in a house, apartment or a few different properties, each one will create a regular income stream by renting them out. This monthly income will go straight to your pocket and while you might have to pay for certain maintenance items that crop up, you will make a good profit. You are in charge of how much rent your tenants pay, so do some research into the area and consider any extra benefits your home might have. If it is newly renovated or has an extra extension take that into account and adjust the price accordingly.

2 – It is a good source of equity

Properties can have large mortgage payments which you could end up taking a long time to pay off. While you own more of the property with each monthly payment, unless you pay above the minimum amount, you could see this dragging on for years. If you have people renting your property and paying you each month, this can go towards paying extra off the mortgage meaning you pay it off much quicker and you will own the property sooner.

3 – Appreciation of property

Over time your property should go up in value. While you will make money from the build-up in equity from paying down the mortgage, your property will also be worth more when you eventually come to sell. Usually (though not always) if you have had the property for a few years, the likelihood is that it can be sold for more than you bought it. Some of the biggest increases for this can be seen if you buy in an “up and coming” area where property pries are relatively cheap. Give it a decade or so and it is a thriving, popular area where property is in high demand. To match this your property will be worth more and you would have made a healthy profit. Don’t just rely on this as sometimes areas don’t go up in value as much as you might think, but be sure to keep an eye on trends and forecasts.

4- It is a hedge against inflation

Real Estate is a great way of hedging against inflation. It is a physical and tangible asset which holds its value a lot better than paper assets which often suffer from rising prices. With property, not only do these rising prices increase the resale value of the property, but as living costs increase with inflation, so does your rental income. This increase allows you to continue to generate a good income from your investment in property and also protects against the general rise in prices across the economy and other similar properties in the area.

5- Home to rent are in high demand

There is a large demand for rental properties and in a time when more and more people want to move but can’t save a hefty deposit, this demand is only rising. In 2017 there were just over 43 million households available to rent, which makes up 36% of all housing units. This substantially lower percentage of homes available to rent than buy, coupled with the increased demand means that you are investing in something that people want and will continue to do so for years to come. It is an investment opportunity that people will only continue to want and you can increase your rent in line with the increased demand and competition meaning you could end up making more money as time goes on.

These are just some of the reasons real estate should be your next investment. When conducted properly and with the right amount of research it can be a very lucrative way to earn an extra passive income on the side.

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