10 Reasons Why Every Entrepreneur Should Invest in Real Estate

Usually, as entrepreneurs, we keep our heads down, in the weeds, grinding out our businesses. Although business is my first love, I have always prioritized investing in real estate. I have been a real estate investor for over a decade now, and it has served me very well in all the work I have done in growing and scaling my business. Here are ten reasons why every entrepreneur should also invest in real estate:

1. Diversity

Investing in real estate can diversify your portfolio and reduce overall risk. It can also serve as a great rainy-day fund and a place to dip into your equity if your business needs cash and collateral. For example, when I first started the business, most of my net worth was tied up in company ownership shares. Now, most of my net worth is tied up in real estate I own, including company shares. Owning and growing a healthy real estate portfolio helps provide diversification in your business portfolio and income streams and helps hedge your bets against volatility in the market or your business.

RELATED: 6 Advantages of Real Estate Investing for Savvy Entrepreneurs

2. Greater potential for appreciation

Real estate can appreciate in value over time, providing a potential source of long-term wealth. For example, I paid $310,000 for the first property I bought in 2011. Last year, it was appraised for $749,000. It was just a property. The appreciation you gain in your real estate portfolio gives you a great leverage when you need emergency funds for your business or need to show additional collateral to get a bank loan for your business.

3. Cash flow

It never hurts to have extra cash coming in from another stream of revenue. Rental income from property can provide a consistent source of cash flow for business owners in addition to your company’s income. You never know when your business will need additional funding for an acquisition or some pivot that may occur within your company. Having an additional income stream from your rental property can only help you in your business endeavors.

4. Tax benefits

Real estate investments can provide various tax benefits, such as deductions for mortgage interest and depreciation. For example, I am able to deduct the interest paid on a mortgage for a rental property from my taxes, which lowers my overall tax bill. Additionally, I also take depreciation deductions on real estate, which helps reduce my taxable income. As your business grows and your income grows, the supportive, powerful tax deductions from your real estate investment consistently come in handy to keep more of your hard-earned money.

5. Inflation hedge

Real estate investments can act as an inflation hedge, meaning they can protect your assets against inflation. As money depreciates over time due to inflation, the value of real estate increases, helping to preserve the value of the investment. As business owners, we are always looking for ways to maximize our money. Inflation literally evaporates the value of our hard-earned dollars, and a healthy real estate portfolio helps you hedge your bets.

Related: 5 Reasons Why Real Estate Is A Great Investment

6. Tangible assets

Unlike stocks or other types of investments, real estate is a tangible asset. You can physically see and touch the property, and you can even live in it if you want. This can provide a sense of relief to many entrepreneurs, especially those who may have experienced losses in the stock market.

7. Opportunities for hands-on involvement

Real estate investing provides opportunities for hands-on involvement for entrepreneurs. You have the option of managing the property yourself, hiring a property manager or sharing the responsibility with other investors. This hands-on involvement can help you understand the real estate market and identify potential investment opportunities.

8. Networking opportunities

Real estate investing can also provide networking opportunities for entrepreneurs. For example, you can connect with other real estate investors, real estate agents, contractors and property managers. These relationships can be beneficial to your business in many ways, such as identifying potential acquisition targets, finding new customers or even finding new business partners.

9. Potential to generate passive income

One of the biggest benefits of real estate investing is the potential for passive income. This can provide business owners with additional financial stability, especially during tough times. This passive income can also be used to grow your business, whether by hiring additional employees, investing in new technology, or expanding your product line. I was able to show that passive income as additional income to qualify for loan opportunities for my business.

RELATED: 5 Tips For New Investors Who Want To Make Money With Real Estate

10. Legacy Building

Finally, real estate investing can also serve as a means of legacy building. By investing in real estate, you are not only creating wealth for yourself, but you are also creating a legacy that can be passed on to future generations. This inheritance can provide financial stability to your family for years to come and be a source of pride and achievement. It adds to the legacy you are already creating through your business.

Whether you are a seasoned entrepreneur or just starting out, investing in real estate can provide you with the stability and added security you need to grow your business and achieve financial success.