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Updated by Joanna James on Dec 30, 2020
Headline for 05 Key Benefits of Real Estate Investment – The Road to Financial Security
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Joanna James Joanna James
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05 Key Benefits of Real Estate Investment – The Road to Financial Security

Are you looking to make an investment that offers a steady cash flow and increased financial security? If so, then real estate is where you should be putting your money into! Here are some compelling reasons as to why real estate makes a sound investment.

1

Steady Cash Flow

One of the main benefits of investing in real estate is that it generates a steady cash flow. This is what is termed as passive income, which means that it is generated without you having to get involved. This takes place due to the rental income you will garner each month; this cash flow will soon cover the cost of your investment, the mortgage, taxes and any related fees and turn into a profit. This in turn becomes a steady addition to your savings, creating a "nest egg" which will continue to grow over the months and years.

2

Property Appreciation

When it comes to real estate, the property value will appreciate over time. This has a two-fold benefit; firstly, the income you earn from rental income will increase and secondly, when you decide to sell, the value of the investment will typically be much higher than it was initially. This appreciation is tied into the land value which depending on the location, will increase or even skyrocket over time. A good example of rising real estate values can be seen in Sri Lanka's commercial capital at properties near the port within easy reach of business hubs, leisure attractions and malls for shopping in Colombo.

3

Increased Financial Security

Unlike investing in the stock market, real estate offers comparatively more financial security. What is important to remember is that such investments provide long term benefits as the profits generated increase over time. This is linked with the steady cash flow you receive and asset appreciation mentioned previously. Of course, before investing you should also ensure that the property is in a strategic location and is backed by a trusted company. Up and coming luxury mixed-use development projects from the likes of Cinnamon Life are amongst the prime examples of sound real estate investments one can consider.

4

Unaffected by Inflation

Inflation is something that can "devalue" the amount of income you generate through investments; inflation is caused by an increase of price levels over time which leads to the decrease in the purchasing power of money. The great thing about real estate investments is that they will offer increasing income even in periods of inflation; during this time, there can be a marked increase in property value as well as rental income leading to higher cash flow.

5

Diversification of Portfolio

To increase financial security, it is essential to have a diverse portfolio where your investments are not tied into only one thing. Real estate is an ideal option when it comes to what is called asset class diversification and reduces the investment risk factor as well. Through such investments, you can rest assured that your portfolio will always be generating some kind of income. Additionally, real estate is a tangible asset which can be used as leverage to secure financing for more investments too.

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