We come across many people who are not sure about investing in real estate. Some people are scared of making such long term commitments, while others are not confident if their investments will reap returns or not. If we look at what Mohsen Motamedian says, there are many other reasons to invest in real estate. At the same time, Max Motamedian says that you must analyze your investment before you get into a deal. This is a way how you can leverage real estate to your advantage. So, today, we will tell you what Max Motamedian has to say about the reasons to invest in real estate.
Important Reasons to Invest in Real Estate
- Diversify the Investment
- Continuous Cash Flow
- Capital Gains
- Tax Benefits
- Debt Leverage
- Acquiring Asset
- Relatively Low Volatility
- Retirement Planning
- Inflation Hedging
- Long Term Investment & Control
In this section, we will share ten reasons why you must invest in real estate. Your investment can be a simple apartment, or it can be a commercial space to lease. No matter what type of property you invest in, it is still essential to have real estate in your portfolio. So, let us now check out the pointers below.
- Diversify the Investment – The first reason to invest in real estate is that it allows you to diversify your portfolio. We are sure that you would have equity and debt instruments in your portfolio, but what about the other things? Adding real estate can help you diversify the portfolio and reduce the risk associated with the other two instruments. In addition, diversification is always a good idea because it also helps you mitigate the market risk associated with the domain of investment.
- Continuous Cash Flow – We often want passive income to fund our lifestyle. If you have ideal cash, how about investing in real estate? You can let the rental income pay the EMIs or let the rental income pay your other loans. The cash flow from the rental income is continuous, and you won’t have to worry about missing the payments too. As per Max Motamedian, investing in property can guarantee you a long term income. In addition, you can also use the cash flows from one property to acquire another property.
- Capital Gains – It is seen that real estate always appreciates in the long term. If you look at the trend of any property in 10 years, you will notice a significant capital appraisal. The capital appraisal can beat the gains from many market indexes. Now, it is not necessary to sell the property for capital gains. You can hold the property and enjoy the appreciating value of your property. This is one of the finest reasons to invest in real estate.
- Tax Benefits – If you are taking a loan to purchase a property, you are most likely eligible for the tax benefit. The tax benefit is often given on the interest payment that you make towards the loan. This way, you can save on your tax liability, and you are using that money to invest in a better place. The deal is certainly a good enough option considering the dual benefit you get after purchasing the real estate.
- Debt Leverage – If you are running a business, you would understand terms like operating leverage and debt leverage. If you are investing in real estate from a business perspective and if you are obtaining the loan to acquire the property, then you can get additional benefits. You can fully deduct the interest payments from the earnings. This way, you can reduce the business’s tax liability as well. So, by investing in real estate, you reduce your business’s tax liability, and you can instead use those funds for acquiring assets. In a way, you are infusing the money back into the business.
- Acquiring Asset – To strengthen your balance sheet, you must have more assets. When buying real estate, you are adding assets to your balance sheet. Since real estate is a tangible asset, it can help you in the future. So, investing in real estate makes a lot of sense from the business and individual perspectives. Holding additional assets is always a good sign for financials.
- Relatively Low Volatility – Mohsen Motamedian says that real estate has low volatility compared with the market indexes or equity investments. The low volatility means a lower risk as well. Moreover, in the long run, the real estate value will appraise. So, you don’t have to worry about the market fluctuations or other factors that would otherwise impact your investment decision.
- Retirement Planning – Another important aspect of life is planning for retirement. We are sure that you would have started it too. When you don’t have a source of income, it becomes difficult to afford the rent. In such a case, investing in real estate is better. Even if you have a home already, investing in real estate would mean that you get a constant source of income in the form of rental payments.
- Inflation Hedging – Mohsen Motamedian says that you can also hedge against the inflation risk by using real estate. The real estate value usually outgrows the inflation, and this is how you can beat the inflation using investments in real estate. Many other assets might not be able to beat the inflation, and in such a case, it becomes pretty important to have real estate in your portfolio.
- Long Term Investment & Control – The last reason why you must invest in real estate is that you get complete control of the property. You can manage it the way you like, and it is also a long term investment. You don’t have to worry about the control of the asset or the investment horizon by investing in real estate.
What are the 5 benefits of investing in real estate?
These are some reasons why Mohsen Motamedian says that you must invest in real estate. We are sure that you would find these reasons logical enough to consider real estate investments. In addition, you can also get in touch with the real estate experts like Max Motamedian, who can help you not only in cracking a deal but who can also guide you about your investment. You will hedge your risk, and someone else will analyze the property. So, go ahead and start looking for investment opportunities in real estate, and we are sure that you will find it beneficial in the long run.