Four Advantages Of Real Estate Ownership

Four Advantages Of Real Estate Ownership



Four Advantages of​ Real Estate Ownership
The following key factors are commonly accepted as​ the​ major reasons real estate continues to​ be a​ good investment .​
for​ the​ majority of​ real estate participants, these factors are the​ most critical issues in​ a​ real estate venture.
1.) Real Estate is​ a​ Necessity: Real estate is​ at​ the​ very core of​ human existence .​
We all have three important basic needs: food, clothing and​ shelter .​
Our world continues to​ expand as​ more and​ more people are being born every day .​
In addition, there continues to​ be larger migrations of​ people from rural areas to​ more populated locations .​
Therefore, people will always have the​ need for​ temporary lodging, permanent shelter and​ places to​ conduct business .​

2.) Hedge Against Inflation: Inflation is​ the​ invisible force eating away at​ the​ purchasing power of​ our dollars .​
a​ dollar, however, doesn’t buy today what it​ once used to .​
It is​ also evident that the​ quality of​ goods our dollars purchase is​ also diminished .​
for​ instance, the​ McDonald’s Big Mac has become progressively smaller year after year .​
Plus, when we purchase a​ box of​ our favorite breakfast cereal, the​ bag inside the​ box is​ practically half empty.
From the​ tenant’s perspective, rent seems to​ go up constantly and​ anyone on a​ fixed income may find it​ difficult to​ keep up with the​ cost of​ living increases .​
the​ owner of​ the​ property also feels the​ effects of​ inflation in​ the​ form of​ increased property related expenses, taxes, utilities and​ maintenance costs .​
as​ property costs rise, owners typically pass these costs on to​ their tenants in​ the​ form of​ increased rents and​ fees .​
Furthermore as​ inflation increases so do property values; owners will often benefit from the​ property appreciation.
3.) Production of​ Income: the​ most attractive and​ lucrative reason for​ owning real estate is​ in​ its ability to​ produce passive income for​ the​ property owner .​
Rent is​ accruing daily while payments made by the​ tenants pay down debt balances and​ produce predictable profits .​
Once the​ property is​ free and​ clear, the​ portion of​ income that was once used to​ service the​ debt payments now goes into the​ owner’s pocket.
4.) Appreciation in​ Value: Due to​ inflation, property appreciates in​ value .​
Usually, this statement is​ generally true .​
While there are no guarantees, if​ care is​ taken with regards to​ timing of​ the​ acquisition and​ trends in​ the​ overall marketplace, real estate tends to​ perform well when inflationary conditions are flat with some moderate expansion.




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