Did you know that over 68% of home buyers say they're "very likely" to buy an investment property within the next two years?
If you're considering getting an investment property of your own, experts say there's no time like the present.
But what makes buying a second home such a great addition to your investment portfolio?
Read on to find out.
1. You'll Protect Yourself Against Inflation
Like any investor, you're likely concerned about the potential for inflation rates to skyrocket in the next few years.
One way to make sure you aren't hit by a sudden surge in inflation?
Buy a second home.
It's just common sense: The more prices rise, the more your house will be worth. Plus, even if your stocks and bonds take a hit due to inflation, you have a wonderful way to earn back that lost income by renting or selling your second home.
2. You'll Get a Great ROI
Sure, buying a second home is a big investment. However, it's also one that comes with a potentially huge payout.
Your property will appreciate in value in several ways. First of all, thanks to the high leverage you get with real estate, you'll be able to get great returns on that initial investment.
Additionally, your home will most likely appreciate in value, especially if you invest a little in modernizing and renovating the home.
It's a double-whammy on your investment.
3. It's A Secure Investment
In spite of what you may have read, the real estate market is far more secure than you might think.
This is because more and more people are beginning to see the value of buying a home as opposed to renting it.
Plus, no matter the current economic climate, people will always be on the lookout for a place to live.
Owning a second property means that, should you run into financial difficulty in your life, you'll always have something you can sell in case of an emergency. Having a second home will help you sleep better at night, while also helping you to build long-term wealth.
4. Current Interest Rates are Low
The current interest rates within the real estate market are one of the biggest incentives to buy an investment property now.
Mortgage rates are on the decline.
This means that now is the time to strike while the iron is hot when it comes to buying a second home.
This is because you'll pay less initially on your mortgage/down payment. Plus, you could even end up buying multiple properties during this real estate climate.
5. You'll Have Something to Pass on to Your Children
Of course, many parents worry about whether or not their children will be financially stable in the future.
Whether you want to sell your home as you get older and pass the profits to your children, or simply allow them to inherit the property, you'll feel better knowing there is something to take care of them after you're gone.
6. You'll Avoid Margin Calls
There are lots of potential investments you can make -- but some of them come with some serious risk to you.
For example, many investments subject you to margin calls, which can be incredibly costly and can even cause you to forfeit your investment.
Since it's impossible for someone to make a margin call on a home mortgage, you'll avoid many of the common pitfalls of investing in the stock market.
7. You'll Get Tax Benefits
No one likes forking over a huge portion of their income to Uncle Sam. A second home can help with that.
This way, you'll enjoy the chance to take more tax deductions thanks to your mortgage insurance and the value of your property.
Plus, you may even be able to defer your liability through a 1031 exchange. Now, you can keep investing in even more homes, while continuing to defer your tax liability.
8. Rent is Likely to Increase
Many market analysts point to the fact that rent will increase dramatically within the next decade or so.
This means that buying an investment property is a much more sound financial decision than renting a home.
9. You Can Plan For Retirement
If you're still working, chances are you've given lots of thought to your retirement.
While investing in stocks and bonds is a solid foundation, you also need to consider investments that will appreciate, not just provide you with a monthly dividend. Additionally, real estate is often far less volatile than the stock market.
Do you really want to live on a fixed income?
First, you can start paying off your mortgage on your investment property now. You'll take advantage of today's great interest rates.
Plus, you can downsize into the investment property or sell it when you're ready to retire.
10. You'll Make Passive Income
Passive income has become increasingly popular in recent years, especially among millennials.
The idea is to pad the income you already make with an investment that doesn't require much time and effort on your part.
You can outsource the care-taking work to contractors, rent out your property when you're not there, and much more.
It's a great way to accumulate savings, pay off your debt, or just have some extra cash to play around with.
Now is the Time to Buy Your Investment Property
Of course, in addition to being a wonderful addition to your portfolio, purchasing an investment property gives you another place to relax.
However, to really get the most out of your second home, you need to make sure you work with professionals and understand the market.
That's where we come in.
When you're ready to purchase an investment property, spend some time on our website to access hundreds of listings to choose what type of property will best suite your investment goals.
Contact us today and one of our highly qualified brokers will be happy to discuss your situation and guide you in the process of acquiring an investment property.
By Coldwell Banker