A new survey from the National Association of Realtors shows more people under the age of 40 are using real estate to build wealth. Investing in property helps you pay for an education, vacations, or retirement. Direct real estate investment means buying individual properties; a trust allows you to invest in real estate that is bought and sold.
Investing in direct real estate rather than a real estate 'trust' gives you more control. There are also better tax advantages.
Here's more on why investing in real estate rather than a real estate investment trust is better for long-term wealth building in Columbia, South Carolina.
More Control
Direct ownership over real estate means selecting the property you want to invest in and overseeing each step. You can also control your rental income by setting the monthly price rather than having others involved.
Owning a piece of real estate allows you to take advantage of appreciation. As your property becomes more valuable, you can leverage the equity to buy other properties or use it for other investments.
You will also have more control over property management. A property management company will deal with maintenance calls and quickly fill vacancies. A property management company will ensure tenants pay rent on time and screen problem tenants.
Tax Advantages
Buying real estate allows you to take advantage of tax advantages such as start-up, advertising, and legal costs. You can also deduct property management fees when investing in property.
Many real estate investors don't take full advantage of the tax benefits. Talking with your accountant or tax professional about how to get the most from your money is best.
However, if you invest in a real estate trust, the government taxes you at a higher rate.
Diversity
Diversity in real estate is best because you choose what types of real estate you'd like to buy. For example, a home is a better investment than an apartment building. You might want to focus on homes where you can command a higher rent rather than a lower rent.
You can also invest in commercial properties rather than just residential income. Shopping centers, office buildings, and hotels can present different challenges but offer higher rental income.
Most REITs lack diversity. REITs focus on one type of real estate. If one part of the economy tanks, you'll lose money quickly.
A diverse portfolio means your investments won't be subject to a volatile market over a long period.
Benefits of Investing in Real Estate Compared to a REIT
The benefits of investing in real estate compared to a REIT include more control and tax advantages. Moreover, there is more diversity when directly investing in real estate rather than putting your money into a trust.
A property management company in Columbia, South Carolina, can help you manage your direct real estate investment. Our skilled experts will ensure your property gets the proper attention for maintenance and rent collection. Save time and money with our experts on the job!
