Superman’s archenemy Lex Luthor and United States president Donald Trump have more in common than you might think. The two both moguls come from worlds that are completely different. Yet, in their early days, they managed to gain success in a common factor that has long been considered the most advantageous investment opportunity for budding entrepreneurs: real estate. Like Luthor and Trump, the primary business ventures of today’s biggest entrepreneurs lie in the world of real estate because of its income growth potential.
If you’re an entrepreneur grasping out the possibilities of a prospective real estate investment, here’s 6 reasons why you should consider taking the leap:
You’ll Have More Leverage To Gain
Real estate is one of the few investment channels where getting a bank loan is less complicated. As such, it opens various opportunities to increase overall return on investment. It’s in this space that your ability to make down payments and leverage your capital increases the potential for returns on your investment.
It Will Help You To Diversify Your Portfolio
Whether the economy is in a downturn or booming, people will always need a place to live. Real estate is a great form of investment for entrepreneurs because it can generate revenue in the worst and best of times. What’s more important, the income property from it will boost your stock, bonds, mutual funds and other investments.
You’ll Have The Potential To Earn More Income
The process of buying property and finding tenants can be strenuous, but they can pay off extensively once they’ve been nailed down and secured. As soon as you’ve acquired both, you’ll have a steady stream of revenue coming your way in the form of rental payments. You’ll want to select the right property to incentivize renters to make rent payments that will help cover the expenses that come with owning a property. Be sure the payments you receive cover the insurance of your property, maintenance, mortgage, as well as taxes. Leave any leftover cash for potential reinvestments such as upgrades and future investments for new real estate.
It Will Help You Learn How To Save More Effectively
Making the decision to invest in a real estate property instantly alters your lifestyle and expenses. In order to make your initial investment, you will have to plan out a budget and begin to set a certain amount of money aside. Once you’ve made the big leap into real estate you have to expand your planning efforts to beyond your everyday living necessities. This will teach you to manage cash flow so that you can have funds available for lump-sum payments concerning your property taxes and insurance. Additionally, the forms of your taxes will become more complicated and as a result, you will be forced to set aside finances to be able to make actual estimated income tax payments. It’s a training experience that will leave you with an invaluable knowledge of how to manage your everyday expenses and business.
You’ll Be Able To Get Financing
Like everyone else looking into finding housing for themselves, you probably have great aspirations for where you’d ultimately like to set down roots. Perhaps you want a commercial high-rise condominium or a house with a beachfront, but you can’t quite afford it at this moment in time. Getting started with something smaller will help you to grow the funds for financing your dream home on your own. Instead of buying that beach house right away, say you invest in a smaller single family house. Instead of the standard twenty or thirty-five percent, it’s backed by an FHA loan that requires one percent down payment. Of course, it might not be the house that you wanted initially, but as the value of your property rises, you’ll be able to take the equity you’ve earned and use it to finance other purchases.
You’ll Have Stronger Roots
For the entrepreneur looking to build a local business, investing in an income-producing property is the way to go. Most consumers appreciate businesses that have a stake in their community. They feel positive about companies that are more likely to put money back into their neighborhoods. As a result, your presence as a community investor will garner you a greater advantage over competitors who move into setting up big box stores without ever appreciating or directly appealing to the culture and interests of a local community. This advantage will continue to build greater profits for you as you grow and establish yourself as a strong community investor. As you grow your real estate investments with renovations and improvements you will be pushed to interact with local officials to the extent that you will eventually have the potential to have a bit of leverage and authority of your own.