Some adults with families may think that investing in real estate isn’t a reality for them, for whatever reason. Investing in real estate— or anything else— isn’t just for individuals or families without children or with older children. It’s something that can be a possibility for a lot of families.
Real estate is a very profitable investment. In fact, real estate is one of the most profitable investments. If you’re a homeowner you’ve just bought yourself a profitable investment, and you’ll probably be able to invest in another property to bring you extra money.
#1: You Can Earn a Second Stream of Income
Investing in real estate will allow you to earn a second stream of passive income. This means that you won’t have to quit your day job or take on a new job that keeps you from being a stay-at-home parent. The average cost of a single-family home in the U.S. is around $375,000 (depending on where you purchase your property), and you can rent this property to a tenant and earn an additional income every month. You can also invest in a multi-family home, like a duplex or quadruplex, and earn even more money.
Owning another property can also be beneficial for families with children. Eventually, your children are going to move out, and it will be helpful if their first home was in a duplex or quadruplex owned by you. This way, you can teach your young adult child how to be independent without them going too far away.
#2: Homes Appreciate and Are Eligible for Tax Deductions
The majority of real estate increases in its value over time so when you’re ready to sell, you’ll end up getting more than what you paid for the property. Rent prices also rise over time, and you’re allowed to charge up to 2% of the property’s total value in rent.
Another bonus is that as a real estate investor, you can take advantage of more deductions and tax breaks during tax time. Some of the costs you’re allowed to deduct include:
- The cost of owning the property
- The cost of managing the property
- The cost of operating the property
#3: There Are Many Types of Properties to Invest In
Your real estate investment isn’t just limited to residential real estate— you can invest in commercial real estate or REITs (real estate investment trusts), industrial real estate, and even raw land.
Generally, commercial real estate (i.e., buildings where business is carried out) is priced much higher than residential real estate, but you have the potential to make more money with commercial real estate. The reason is that commercial properties tend to have more tenants, and these tenants are business owners who are more likely to pay their rent.
#4: You Can Enjoy Your Property Too
Many families have a vacation home, or their home away from home while they’re on vacation. If you already own a vacation home, you may be able to rent it out on a short-term basis (depending on the short-term rental laws in your area) on sites like Airbnb and Vrbo. If you don’t have a vacation home, you can look into loans for vacation rentals in areas that get a lot of tourists so you can make some extra money.
In some places, short-term rental laws allow property owners (you) to enjoy your own vacation rental a few times throughout the year. So when you’re not renting your property to another family or individual, you and your family can enjoy it yourselves for your next vacation!
#5: Build Your Wealth
If you try this and find that you like owning and managing properties, you can build your equity and wealth by paying down your mortgages and buying additional properties to rent out. If you choose to do this, be sure to diversify your real estate investment portfolio by investing in different types of properties. Many people have built a successful secondary career by investing in properties.
Even if you choose to stick with only one property, you’ll still have an additional source of income— an income that you don’t have to work much for. There’s still the management of the property and dealing with tenants, but you can always hire someone else to do this.
There are many more benefits to investing in real estate, but these five are some of the key reasons. Just remember to do as much research about the real estate industry as possible before you decide to invest.