The federal government also shields real estate investors from high tax rates (Downs 176). Buildings have the ability to depreciate, which means that they partially wipe out the profits of investors, allowing them to collect rental income at a lower tax rate. The building can appreciate in value without being taxed until it is sold. Selling without paying tax is another possibility. Additionally, the investor may be permitted by the Internal Revenue Service to sell his real estate and buy more on a tax carry forward basis if the transaction is well-structured. After cashing out of the investment, this permits the investor to defer paying taxes. This clearly has advantages over the stock market, where investors are subject to high taxes and cannot be easily excluded. As a result, real estate rises to the top of the list.
A real estate investor also benefits from a beneficial inflation hedge in his returns. The rents paid by tenants are the real estate returns, and they are directly related to the investor’s returns. Tenants’ rent has recently been required to be indexed to the current rate of inflation by real estate managers. On the other hand, when a lease term expires and the contract is renewed, rental rates frequently rise (Downs, 176). Whatever the case may be, it is evident that areas with high property values are more likely to see rapid increases in real estate profits. Even though real estate prices don’t always go up, it’s clear that their value will go up as the area around them grows. However, the investor’s profits do not depend on how long it takes for the property to appreciate; the most important thing is that the property will eventually appreciate and bring in a lot of money for him. The stock market is much more volatile than the real estate market, making it impossible to predict what will happen to one’s investments.
An investor’s ability to influence the performance of their investments and the potential income they will generate is yet another advantage of investing in the real estate sector. Investors have more influence in real estate than in the stock market because it is a tangible asset. An investor might, for instance, substitute a higher-quality tenant for one that will increase his income. Because he has some say over what he can do with his property, his control is achieved. As a result, the control and concern he displays over his investment has a direct impact on his income.
It is evident that commercial investors will likely gravitate toward the real estate sector based on the current trends in the commercial market. It is evident that investors have turned their attention significantly to the real estate sector.
A recent prediction regarding the economic outlook for the United States reveals that, between 2015 and 2020, the real estate industry will reach its peak, with many investors choosing to invest. However, if you’ve given up on the stock market, it probably won’t be as rewarding. In any case, after anticipated time of two years, the market will acquire prevalence in the future. The increased influx of investors into the real estate market will have been shocking; Consequently, it will begin to lose value. As a result, the two economic fields’ inflation possibilities will have reached equilibrium by the end of 2019, allowing investors to maintain their real returns.
By: Nimas Ayu Nawal Maulida
Write and Win: Participate in Creative writing Contest & International Essay Contest and win fabulous prizes.
