Is investing in real estate a good investment? As we have some expertise in investing in real estate (as well as running a property blog), in this blog post, we will offer our views on this topic. However, be aware that it is not financial advice, the circumstances of each person and their portfolio are unique, so do your calculations or visit your advisor before taking financial choices.
Here are my top five reasons why real estate investment is a good choice:
1) Low-cost leverage is available to help you increase your return
One of the most important benefits of investing in real estate compared to other investment kinds is the opportunity to borrow a big amount of money at a low rate to buy a house. If your property’s worth rises, the amount of money you invest increases the return on your investment.
It goes without saying that if prices continue to decrease, your equity will continue to drop at an even quicker rate. You will, on the other hand, almost always succeed in the long run as long as you do not get too hungry since property is a more stable investment.
Additionally, if you purchase the property at the right moment, you may be able to make a large amount of money. Take into consideration the possibility of receiving a multi-year reward when you sell your home for a profit.
2) It has the ability to generate passive rental income
You may generate rental income by renting your home to others (or a place in your house if you currently live there). This rental income may help balance your mortgage payment, which is one of the main instalments, and therefore enable you to develop equity on your investment real estate. Even after your mortgage and the related maintenance costs have been paid, you may produce a positive cash flow if your return is high enough.
3) The capacity to make changes
If you are the kind of person who likes to repair things, you may add value to your property by renovating or refurbishing the interior design of the house. Even a simple paint application may make a big impact in a house’s total worth. Renovations could also be worth doing to rent out your property for future passive income.
4) No tax on capital gains
If your property increases in value and you sell it for profit, you cannot tax capital gains as you would if you had sold inventories (unless the IRAS come after you as a property trader). In contrast, the government accounts for up to 20 per cent of your earnings (according to your tax base).
5) Property purchase is a well-known technique of accumulation of wealth
Looking at the 40 richest people in Singapore at Forbes, you will see that many of them have built up their fortunes via real estate development and investing. Consider the environment: the wealth of the average Singaporean most likely comes from the value of his HDB flat, rather than any other asset. Not only does it promise stability and long term returns, the nature of the property market in Singapore is stable so your investment is sure to appreciate.
Investing in real estate investments is not always easy. With Real Vantage by your side, you can make sure that you have quality experts and great real estate investment deals with them. Check them out today!