I thought I would start off the week with 5 reasons to invest in real estate. As many of you may already know real estate is a very powerful vehicle. In fact 90% of millionaires made their first million in real estate. That is one statistic that is hard to ignore. So without further delay here are the 5 reasons.

5) Appreciation: Historically real estate has been know to be a great combatant of inflation because of the way it continues increases in value over time. Simply by owning a property you can enjoy the effects of appreciation, as you watch the value of the property go up, you will gain equity. While there are periods of time when real estate prices do level off or drop, they do not counter act the long term benefits gained from investing in real estate.

4) Tangible Asset: The next great thing about real estate is that is a physical piece of land. Often when you invest all you see is a piece of paper showing what you own. With real estate it is different, you have your money secured to the property. This security can makes it easier to acquire loans or refinancing should you need it.

3) Cash Flow: This one of my favorite aspects of real estate. Unlike a lot of other investment vehicles, real estate can provide you with a constant stream of income. You can then use this generated profit for everyday costs or reinvest it in another property. This income is passive so it does not take up a portion of your time.

2) Equity Build Up: As you use rental payments to pay down the mortgage, you will be gaining equity in the property. This is because part of your mortgage payment goes towards paying interest while the other part pays down the principal on the loan. Over time you pay off the whole mortgage, and a property that you started off owning 10% of is now 100% your own.

1) Leverage: The number one reason for investment in real estate is the ability to leverage money. Whether you are taking a mortgage from a bank or using Other Peoples Money (we’ll come back to this in the future), leveraging allows you to generate a return on people that was not initially yours. The ability to leverage money is one of the powerful ways of generating wealth and is something you should become very familiar with.

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Filed under: Investments, Real Estate