An article series on navigating the private lending world

As the world’s population grows, so does the demand for housing and its associated amenities. Several benefits make real estate investment a safe and rewarding option: potential capital gains, ongoing rental income, and tax advantages. Whether you’re looking to invest in a rental property, a piece of land, or even a commercial property, there are many reasons why real estate can be a profitable investment option.

Real estate investments are relatively stable.

Unlike stocks or other types of investments, real estate is not subject to the same level of volatility. It means you’re less likely to experience significant losses, even in a down market. Additionally, because real estate is a physical asset, it’s not subject to the same risks (e.g., currency fluctuations or interest rate changes) as other types of investments.

They offer a steady stream of cash flow.

When you invest in rental properties, you receive regular rental income, which can help to offset your expenses. An investment in rental properties can be especially beneficial if you’re looking to generate a steady stream of passive income. Additionally, because real estate values tend to appreciate over time, you’ll also see your property’s value increase, which can lead to even more profits.

Owning properties can offer tax benefits.

Depending on the type of property you invest in, you may be eligible for depreciation or mortgage interest deductions. These deductions can reduce your taxable income, saving you money in the long run.

Investment properties offer a high level of control.

Real estate allows you to have a say in how your property is used and managed. It means you can choose to invest in properties that align with your investment goals, such as rental properties in a desirable location or commercial properties in an area with a lot of growth potential. You can also choose to manage your properties yourself or hire a property manager to do it for you, giving you even more control over your investments.

You gain the ability to leverage.

Leveraging is simply borrowing money to increase your return on an investment. Basically, you’re using other people’s money so you can put down a smaller amount of money when you buy a property. It can help you quickly build a portfolio of properties, generating significant profits over time. You can also benefit from the appreciation in property values, which can lead to even more profits.

You can force appreciation.

You could see an appreciation of 3%-5% annually by simply maintaining your property. However, it is possible to take your investment a step further by actively forcing appreciation of your asset. It involves upgrading the interior, landscaping, and adding other external elements that brighten the property’s appeal. Not all renovations increase property value, so make sure to enhance the right parts.

There are many reasons to believe that real estate is always a good investment. The potential for appreciation, the income produced by rentals, and the tax benefits are just a few. Although there are no guarantees in life, investing in real estate is one of the smartest things you can do with your money.

  • Damon Riehl

    Damon Riehl, founder and CEO of Investment Property Loan Exchange, has over thirty-five years of lending experience in a broad array of asset classes, including commercial and residential mortgage, small business, and construction lending. He held top leadership positions as head of commercial lending for Ocwen Mortgage, head of unsecured lending for Citibank, global mortgage leader for GE Capital, head of construction products at Fannie Mae and a member of the Harvard Joint Centers for Housing Studies. Damon has built six de novo lending platforms and used that knowledge to build and grow Investment Property Loan Exchange and the FinTech platform,

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