The team of hard money lending experts at Alpha Funding Partners genuinely believe that investing in real estate is one of the most efficient and hassle-free methods to generating passive income, building up savings to put towards retirement, and crafting an ideally diversified and profitable investment portfolio that is resilient to economic and societal fluctuations such as the current pandemic that has turned nearly every facet of life on its head. From our perspective, real estate investing is preferable because you are essentially using other people’s money (i.e. tenants) to recover your initial investment expenses while upping your monthly cash flow all at the same time. If you are currently wondering if getting into the real estate investment industry through a hard money loan or acquiring a multi-family property is the right long-term move for you, here are three main reasons why investing in real estate right now with the help of the team at Alpha Funding Partners is a great decision for your financial future.
1. APPRECIATION & LEVERAGE
When you make an investment in real estate, your equity in the property asset increases the longer that you maintain ownership of it. Equity refers to the percentage of the property that you own outright—as opposed to the portion a bank or lender may own if you take out some form of conventional or alternative financing. As you continue to make loan payments, you gradually accrue more equity in the property—and as an added bonus, over time the property will appreciate in value which also enhances your amount of equity. After a while, this means that you can leverage this subsequent equity to obtain either a line of credit or traditional loan that you can then use to purchase other properties to add to your investment portfolio and increase your passive revenue stream—the more properties and tenants you have, the more money you will be taking in on a monthly basis.
2. RELIABLE RETURNS ON INVESTMENT
Years and years of historical market data will prove again and again that real estate offers more ideal and consistent returns on initial investment than the stock market. On average, real estate appreciates at a rate between six and eight percent. When compared to the average money market investment appreciation rate of one or two percent annually, real estate is the clear winner from an investor’s perspective. Real estate is also far more predictable. The majority of investments—regardless of the type—don’t enable you to accurately project the amount of cash flow you will eventually realize in the future. With real estate, however, if you know what a given property is renting for and that you will be able to attract tenants, you will be able to predict your cash flow on either a monthly or annual basis—just be sure to budget in expenses for regular maintenance and upkeep.
3. PORTFOLIO DIVERSIFICATION
Every form of investment carries an inherent risk profile. Talk to any financial expert and they will tell you that diversifying your investment portfolio is one of the most effective ways to minimize your risk and improve your long-term financial stability—essentially safeguarding your hard-earned money and making it more resilient to recessionary periods and other negative economic situations. This is sometimes referred to by insiders as “asset allocation” and entails divvying up an investment portfolio among different asset categories. In the real estate sector, this can be accomplished by investing in commercial, multi-family and single-family homes in different geographical areas. That way, when conditions become adverse in one facet of your investment holdings, the others will compensate for the temporary downturn.
Alpha Funding Partners offers the best combination of rates and leverage. As a hard money lender, we understand the importance of partnering with each real estate investor that we work with. Not only do we provide quick access to capital, we are upfront and transparent about our fees and what you get when you work with Alpha. We are a New York and New Jersey based hard money lender that strives to build long lasting relationships with each real estate investor that we work with. Interested in having Alpha fund your next loan? Reach out today because real estate investing is always a good idea!