Earlier, when you started investing in real estate, you really wanted to make money from it. You looked forward to earn an income from it because you have invested a lot, and you have the mortgage to pay back. But as the years go by, you begin to believe that real estate is not just the means to make money, it is also a good outlet for using your skills as an observer and planner, you realize that you would like to buy and sell properties just because you enjoy it. That's when it is no longer all about making money, but passion. Most real estate agents buy and sell properties for their clients because it is their job and they need commission to live, but when real estate becomes a passion, the story is entirely different. The passive nature of the investment has also prompted many people to choose real estate. Many people, when they return from their active jobs, choose to buy and sell real estate because they enjoy it. Of course, the money is an added attraction, after all they are retired from their regular job.
When people are addicted to real estate, they really get into the job because they love it and not because they have to do it as part of their job. Even if they rent out properties, and tenants call in with leaky taps and broken plumbing, they see it as passion.
Here are other reasons why people love going into real estate, apart from making money, of course:
Diversified portfolio
Smart investors do not put all their eggs in one basket but diversify it to other investment options. Real estate is just one of them. Real estate is expected to have appreciation, but sometimes, things can go in such a way that the market values go down and you may not enjoy the desired appreciation. Though situations like this are rare, it can happen that way as well, just like with stock market, mutual funds and so on.
As an inflation hedge
Real estate acts as a hedge against inflation. Every investor must be aware of how to protect his investment and how to tide against inflation. Real estate is considered as an inflation hedge because it is expected to lose little value when compared to other assets, especially when there is price rise. It is expected to hold its value when all other investments supposedly go down.
Enjoy tax benefits
Tax payers would enjoy any respite when the government begins to tighten the belt around the noose, when it comes to tax payment. Investing in real estate is likely to give you a tax deduction. It would also provide you the tax deferment liability, thanks to the 1031 exchanges, so you can continue investing in properties.
Principal payments
Your tenant in the rental property is helping you pay your mortgage payment in the form of rent. While the principal portion of the payment is minimal in the beginning, amortization would lead to a speed up of the principal amount of the loan. Soon, you would be shaving several thousands of dollars with regard to loan amount, and you realize that one day that the property has become yours forever.
High leverage
Lenders are prone to give you loans to buy properties when compared to other investment options like stocks, mutual funds or gold. While they are quite apprehensive about the latter, they welcome real estate investment, provided that it holds a better leverage when compared to other investment options.
Finally, real estate is a good investment because a number of strategies are in place when you want to sell a property and a thoughtful strategy would give you good ROI.