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4 Reasons Why You Should Diversify Your Portfolio With Real Estate

System - Friday, November 4, 2022
Property Management Blog

Real estate investors bought almost a quarter of all single-family homes sold in 2021, reports Pew Trusts.

With increasing rent prices and high demand for new housing, now is the time to invest in real estate. 

Already an investor? Real estate investment is one of the most stable, long-term moves you can make. Chicago, IL, is one of the best places to do it.

But what exactly are the benefits of real estate investment? Is it worth it? How much time do you need to commit?

Our guide tells you all you need to know. Read on to learn more.

1. Diversification Helps to Secure Your Wealth

Diversifying your portfolio with real estate helps to reduce your investment risk. You can mitigate diversifiable risk, AKA systematic risk, by investing in multiple assets. Real estate is one of your best options.

Assets in several markets are unlikely to be hit by systematic risk at the same time. Maintain your cash flow even if market-specific fluctuation affects one of your sources.

2. Earn a Long-Term, Stable Income

All markets ebb and flow, but real estate offers greater long-term prospects than most. It remains one of the most stable investment markets, especially compared to stocks.

Having physical property means you can always sell it to gain cash. And if you invest in the right area, you will see your investment climb in value in most cases. Thriving markets, like Chicago, IL, offer vast opportunities.

Renting your property to tenants also boosts your cash flow. This will remain a viable option throughout your investment.

3. Real Estate Investment Trusts Make Things Easy

Real estate investment trusts (REITs) reduce the pressure of maintenance and management. One of the things people fear when they invest in property is the upkeep of the building. Most investors lack the time.

REITs let you invest in property via a property management company. They take care of maintenance, and you receive payment in the form of regular dividends. If the market value spikes, you can sell your property for profit.

4. Real Estate Gives You Tax Benefits

There are many tax benefits when you invest in real estate. For example, you can lower your taxable income via rental property depreciation. Residential properties depreciate at 3.636% a year for 27.5 years. 

Spend more than half your working hours, or more than 750 per year, renting property? You could qualify as a property professional. This opens the door to further tax deductions for wages, dividends, and interest.

Time to Invest in Real Estate

We hope our guide got you excited to invest in real estate. Of all the investment markets, real estate is among the most stable. You could benefit from a stable, long-term income with diverse options for reinvestment.

Our Home River Group team has provided property management services since 2016. We are one of the biggest single-family property management firms in the Midwest.

Based in Indianapolis, IN, we have helped buy, renovate, lease, manage, and sell over 6,000 homes. We have preserved over 16,000 assets in Central Indiana.

We can do the same for you; we pride ourselves on our customer service.

Looking to invest in real estate? Contact our team today!