1. A hedge against inflation

Unlike stocks and bonds, your rental property can be a hedge against inflation. This is because real estate tends to maintain value over time. As inflation rises, so will rent which further increases your investment returns. Similarly, if you acquire a property with a fixed-interest mortgage, you pay with a cheaper dollar as inflation rises. A prudent investor will have a diverse mix of assets in their portfolio.

2. Real estate reduces your tax bill

IRS offers depreciation tax deductions to real estate owners. The advantage of real estate investment is that property value tends to increase over the years. In the long run, you don’t have to pay any taxes. Some investors defer capital gains from sales proceeds to buy `like-kind’ property.

3. A way to build equity and wealth

If you want to build equity and wealth, you can’t go wrong with real estate. Over time, your property appreciates boosting your net worth. If you acquired your real estate via a mortgage, you build equity along the way as you make the monthly repayments. Of course, you can acquire more properties and build your wealth even more.

4. A way to generate passive income

If you play your cards right, your rental property can give predictable passive income. Unlike other investment vehicles, you make decent bucks with little active management. If you’re not ready to own a property, you can invest in REITs. It’s a prudent investment because you’re entitled to a share of the generated income.

While real estate investment may look like an expensive undertaking, the rewards are worth it. It’s a surefire way to build substantial wealth over time. Whether you’re a first-buyer or a seasoned investor, you should consult a professional investment advisor to guide you every step of the way.