Income: With stocks and bonds both yielding about 2%, one of the main benefits of real estate is the ability to generate significant income without having to sell your investment. ... For these reasons, it can be a great way to hedge against the possibility of rising inflation, which generally hurts both stocks and bonds.
One of the benefits of investing in real estate is a hedge against inflation. With high inflation, your rental income and property value increase significantly. Real estate investors welcome inflation with open arms because as the cost of living goes up, so does their cash flow.
The rental real estate investing strategy offers a number of profit opportunities. Cash flow is created when the monthly rental income exceeds the mortgage and other expenses. Long term wealth is created through appreciation of the property, the tenants paying down the mortgage, and tax advantages.
There are many ways to turn a profit with real estate. When you buy a stock, the only way you can make money is if the stock appreciates in value, and you sell it at the good time. With real estate you can make money in many ways, here are 12 examples:
- Rental income
- Buying low
- Selling high.
- Increasing equity
- Leverage increases returns
- Leverage makes you profit on the full selling price
- Renting smaller units
- Renting to businesses
- Tax benefits on interest
- Tax benefits on improvements
- Profit from a lump sum on a refinance
- Profit from extra cash flow on a refinance