With the recent stock market volatility, investors may be looking for opportunities to diversify and protect their investment portfolio against the dips and the potential for inflation. Over the long term, real estate provides steady appreciation and is usually an excellent investment response to inflation. Savvy consumers are becoming increasingly interested in owning property to get the many benefits that help offset stock market volatility and future inflation.
Since mortgage interest rates remain near all-time lows, it’s a great time to add real estate to an investment plan. Here’s a look at several of the potential benefits of diversifying a portfolio into real estate.
Appreciation. While every market is different, home values have historically appreciated approximately 4% annually. Plus, as real estate is a leveraged investment, appreciation is on the total price of the home, not just the cash down payment made to purchase it.
Tax benefits. A tax advisor can help determine eligible tax deductions on an investment property, which generally include mortgage interest, property taxes, depreciation and operating costs, such as repairs and maintenance.
Tenant-paid mortgage. As a tenant pays rent, the mortgage balance is reduced, building equity in the property for a future sale or to borrow against and buy another property.
Cash flow. Depending on expenses, positive cash flow can be generated from the rent you charge.
If you’re thinking about investing in real estate, a Long & Foster agent can help evaluate investment properties to fit your financial goals. In addition, they can connect you with partners in mortgage, title, insurance and property management to assist every step of the way.