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Like most entrepreneurs, you bury yourself in your business – between hiring and managing employees, day-to-day tasks, and figuring out how to scale your business. Every dime goes straight back to fueling the growth of your business. You cannot consider another item on your to-do list, especially a venture like buying real estate. I am writing this article to change my mind.
Currently you have all your eggs in one basket without a large safety net. A slow month or a quarterly projection that misses the mark can be extremely stressful. I believe there is a way to ease some of the emotional rollercoasters by owning assets that can work for you while you work on your business. After all, real estate investors invent 90% of millionaires. As a savvy londonbusinessblog.com, I doubt you would want to ignore those opportunities.
Related: 8 Ways Real Estate Is Your Smartest Investment
Now that I’ve piqued your interest, I’ll give you five reasons why you should invest in real estate and ways you can take action today.
1. Equity in a home is available for a large cash injection through a refinance or HELOC
If you buy a property over time, it will increase in value. The amount between your purchase price and the raise is all profit. You can refinance that money and not be taxed on it, or if it’s a primary home, you can get a HELOC against the mortgage. I know a few entrepreneurs who needed a few hundred thousand dollars to grow their business and get the money quickly because they owned real estate. I’m not advocating irresponsible spending, but there are times when the influx of cash is needed — and fast. It would be nice to have that safety net.
2. Take Huge Tax Deductions By Owning Your Building
If you have a business where you need retail, warehouse or office space, consider buying the building rather than renting it. I know this isn’t always possible, but if you’re saving money and investing in the stock market or paying a very high monthly rent, why not use that money for an asset? You save on rent. You can also have a property where you can have tenants who will cover your mortgage. You get big tax deductions and can even take advantage of solar credits. The benefits are endless. Buying a building may not be feasible if you are in the early stages of your business, but it can certainly earn a spot in a three-year business plan.
Related: 8 Proven Ways to Make Money in Real Estate
3. Create an additional income stream that generates profit whether you work or not
I believe in having multiple income streams, especially the ones that pay you for not doing work. I’m talking about cash flow. After you’ve paid all your bills and mortgage on a property, you can spend the money you earn. It can be a significant amount depending on how many assets you own and profit margins.
4. Reduces volatility if you invest exclusively in equities and an inflation hedge
Most of the income that comes into your business generally goes straight back to your business. But if you’re paid personally through your company, you’ll likely create a savings account and invest in stocks or mutual funds. You could take that savings and invest in real estate. Stocks don’t offer you many of the benefits shared in this article. If your tenants cover your mortgage on a property, it doesn’t matter if the value of your assets falls temporarily. You may be able to continue earning income from the property if you have cash flow no matter what the market is doing. With all the variables of running a business, you can lower your stress level by knowing you don’t have any outstanding invoices.
In addition, if inflation rises, the currency falls in value. It takes more of it to make the same purchase. If you buy a home with a fixed-rate mortgage, your monthly payment is based on the dollar’s value at the time of purchase. As you make payments over the years, you pay with cheaper dollars as inflation rises. If you’re not convinced, remember that the entire island of Manhattan was bought to the Dutch in 1626 for $24 worth of beads and trinkets.
Related: Getting Started With Passive Real Estate Investing
5. Someone else does the work while you still get a great return – if you invest passively
Imagine having $10,000 deposited into your account every month while running your business? You can invest in syndication deals where you are 100% passive and receive significant returns. These are large multi-family warehouses, industrial buildings and mobile home parks, where someone controls all the moving parts of the deal and invests your money while you reap the profits. In addition to all this, you can take advantage of depreciation. The amount of passive loss that you reinstate through passive gains is tax deductible.
“But is it risky or complicated to get into real estate?” you ask. It’s not as complicated as other investors would like you to think. The more competition in the market, the harder it is for real estate investors to find deals. I believe there is plenty of room for everyone in every market so I want you to know about this best kept secret. Buying real estate is infinitely easier than building a profitable business. In other words, you can. As an londonbusinessblog.com you are driven to success and you owe it to yourself to use all possible tools to achieve your goals. I don’t know anyone who has bought a real estate deal at the right price and ever said that buying real estate wasn’t a great move for every aspect of their lives. After all, 90% of millionaires can’t be wrong.
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- 1 1. Equity in a home is available for a large cash injection through a refinance or HELOC
- 2 2. Take Huge Tax Deductions By Owning Your Building
- 3 3. Create an additional income stream that generates profit whether you work or not
- 4 4. Reduces volatility if you invest exclusively in equities and an inflation hedge
- 5 5. Someone else does the work while you still get a great return – if you invest passively