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Usually, as entrepreneurs, we hang our heads in the weeds and grind our business down. My first love is business, but I have always prioritized investing in real estate. I have been a real estate investor for her over 10 years and have been extremely helpful in addition to the work she has done to grow and expand her business. Here are 10 reasons why every entrepreneur should also invest in real estate.
1. Diversification
Investing in real estate can diversify your portfolio and reduce your overall risk. It also serves as an emergency fund and a place to invest in stocks if you need cash and collateral for your business. For example, when I first started my business, most of my net worth was tied up in company ownership. Most of my net worth is currently tied up in the properties I own and shares in companies. Owning and growing a healthy real estate portfolio can add diversity to your business portfolio and income stream, helping you hedge your bets against market and business volatility.
RELATED: 6 Advantages of Real Estate Investing for Savvy Entrepreneurs
2. Great potential for evaluation
Real estate can appreciate in value over time, providing a potential source of long-term wealth. For example, I paid $310,000 for my first property purchased in 2011. Last year it was valued at $749,000. It was on just one property. The valuation you get on your real estate portfolio can be very useful when you need emergency funding for your business or need to present additional collateral to obtain a bank loan for your business.
3. Cash flow
Having extra cash coming in from another revenue stream is never a bad thing. Rental income from real estate can provide a consistent source of cash flow for business owners in addition to income from the company. You never know when additional funding may be needed for business acquisitions or any pivots that may occur within the company. Having an additional source of income from your rental property will only help your business endeavours.
4. Tax incentives
Investing in real estate offers a variety of tax benefits, including deductions for mortgage interest and depreciation. For example, interest paid on a mortgage on a rental property can be deducted from taxes, ultimately lowering your overall tax bill. In addition, depreciation of real estate is also deducted, so taxable income can be reduced. As your business grows and your income increases, beneficial and strong tax deductions from your real estate investment will help you keep more of your hard-earned money.
5. Inflation Hedging
A real estate investment can act as an inflation hedge and protect your assets against inflation. As inflation reduces the value of money over time, real estate tends to increase in value, helping to preserve the value of our investments. looking for. Inflation literally evaporates the value of your hard-earned dollars, and having a healthy real estate portfolio can help you hedge your bets.
RELATED: 5 Reasons Real Estate is a Great Investment
6. Tangible Assets
Unlike stocks and other types of investments, real estate is a tangible asset. You can actually see and touch the property, and you can even live there if you wish. This can provide comfort to many entrepreneurs, especially those who may have experienced losses in the stock market.
7. Opportunities for hands-on participation
Real estate investing offers entrepreneurs opportunities for hands-on involvement. You can choose to manage your property yourself, hire a property manager, or partner with other investors to share the responsibility. This hands-on engagement also helps us understand the real estate market and identify potential investment opportunities.
8. Networking Opportunities
Real estate investing can also provide networking opportunities for entrepreneurs. For example, you can connect with other real estate investors, realtors, contractors and property managers. These relationships can help your business in many ways, such as identifying potential acquisition targets, finding new customers, or even finding new business partners for him.
9. Possibility to generate unearned income
One of the greatest benefits of real estate investing is the potential to generate passive income. This can provide business owners with additional financial stability, especially during difficult times. This passive income can also be used to grow your business, such as hiring additional employees, investing in new technology, or expanding your product line. I was also able to show that passive income as additional income and qualify for debt opportunities in my business.
RELATED: 5 tips for new investors looking to make money in real estate
10. Legacy Building
Finally, real estate investing also serves as a legacy-building vehicle. By investing in real estate, you not only create wealth for yourself, but also create a legacy that can be passed on to future generations. This legacy can bring financial security to the family for years to come and be a source of pride and achievement. It’s also just adding to the legacy you’ve already built through your business.
Whether you’re a seasoned entrepreneur or just starting out, investing in real estate provides the stability and extra security you need to grow your business and achieve financial success.
