As a business owner you have an advantage when it comes to building wealth, but it's not through spending your profits, it's by investing them. Here is the why and how....
Real estate is something that will always be in high demand. People need places to live, companies need buildings for business operations, and so forth. And yet, many people are still timid about the idea of investing in real estate because they’re uncertain about how it works, whether it’s a viable option, and what kind of benefits they can find.
“Don’t wait to buy real estate. Buy real estate and wait.” - Will Rogers, actor
Look no further because this guide will give you five great reasons to consider real estate investments as a source of passive income. In addition to diversifying your investments, there are plenty of benefits that come from investing in real estate, most rooted in the security that comes from real property as opposed to liquid financial assets or stock-based investments.
Re-Investing Puts Your Money to Work
When you re-invest your earnings, there’s always some level of risk involved. However, when you re-invest with real estate, you’re in a much better position. Not only can you leverage a small investment to make a big gain, but you can also put every dollar to work to help build up your real property investments.
You can buy and renovate homes, upgrade properties and then rent them out for top-dollar, and then take those rental or sale profits and turn around and re-invest them in the next property. This also allows you to force appreciation, in a sense—unlike other assets where you just have to wait for them to mature, real estate can be enhanced and improved, rendering it more valuable than it was even just weeks before, just like a business.
You can also do all of the above, but as a passive investor. This is one of the reasons I love investing in commercial real estate like apartment buildings. Business owners can own real estate but not have to become landlords, while getting great returns (similar or better than the traditional route). This allows you to keep your precious time and have your businesses profits keep working for you at the same time.
Protection from Business Changes
As business and the economy change and shift, so does the stock market. Other investments will fluctuate with those changes. When the economy is down, stocks are down. Investments lose value. It just happens over time. Real estate, on the other hand, is pretty stable when it comes to retaining value, even in volatile business markets. The housing market bubble that popped in the early 2000s was the exception, not the rule. And the type of real estate we invest in made it through the real estate crash very stable.
Real estate investments may still ebb and flow, but not nearly as severely as other types of investments that hinge so dependently on the state of the economy. And now that we’re living in a global economy, that stability is more valuable than ever.
Multiple Streams of Income
Choosing real estate as an investment can help you create multiple streams of passive income. That means that while you’re working on your business, your existing properties are earning you real income just by existing. Whether you choose to be a landlord and invest house by house or you decide to join our Investing Group and skip being a landlord, each property you invest into is an additional stream of passive income. This diversification feels really good if anything affects the industry your business is in.
Long-Term Wealth Building
All of this leads to the ability to build long-term wealth. A few simple but solid real estate investments will go a long way in helping you find financial diversity and build wealth that continues to grow on its own. All you have to do is own the real estate and take care of it accordingly. Real estate is typically seen as an appreciating asset. Although it will have some ups and downs, as mentioned earlier, it’s not nearly as significant as other investments.
This kind of long-term passive income can set you up for a future where your investments are making you as much or more money than your business. No one knows what will happen to the economy in the next 10, 20, or 30 years. It could go well. It could go horribly. The risks are much bigger than with real estate. No matter how the market ebbs and flows, people will always need a place to live, so this is a great opportunity to create long-term income.
Finally, we can’t talk about the perks of real estate investments without discussing the tax benefits. Business owners (aka real estate investors) are eligible to take advantage of a variety of tax write-offs.
Of course, you’ll want to make sure that you speak to your tax advisor about which tax breaks you qualify for and how to claim them. It’s also a good idea to let a pro prepare and file your business taxes related to real estate investing.
There are many ways to invest in real estate, but the best way for those who don’t want to be landlords is to become real estate investors through investing as a passive investor with our investment group. This can create a diversified investment portfolio, and, more importantly, a long-term stream of passive income when you do it right. As a business owner this will put your profits to work for you, hedge against changes that can happen in business (it has happened at one time or another to all of us) and has some great additional tax benefits that are unique to only real estate.
If you are ready to start passively investing in real estate, watch our Master Class 'Profits To Wealth' and join our Whole Wealth Investing Group so we can help you determine what your investment goals are and how we might help you.