When the stock market is near record highs, optimistic investors are happy. Realistic investors recognize the opportunity to diversify and rebalance their portfolios. Investors who have gained profits from the improving stock market may want to convert some of that profit into a down payment on an investment property. Considering mortgage rates are at all-time lows, there may never be a better time to diversify your portfolio into real estate.
Real estate, whether you choose to buy and flip or fix and hold, can be a solid addition to any investment plan, with several potential benefits.
Appreciation. While every market is different, home values have historically appreciated approximately 4% annually.
Tax benefits. Your tax advisor can help determine eligible tax deductions on an investment property, which generally include mortgage interest, property taxes, depreciation, and operating costs, such as repairs and maintenance.
Tenant-paid mortgage. As your tenant pays rent, your mortgage balance is reduced, building equity in the property for a future sale or to borrow against and buy another property.
Cash flow. Depending on expenses, you can usually generate positive cash flow from the rent you charge.
