10 Reasons why small business should invest in residential real estate

Investing in residential real estate can be a smart move for small businesses looking to diversify their investment portfolio, generate passive income, and build long-term wealth. Below is a list outlining 10 reasons for investing in residential real estate for a small business. 

1. Long-term asset appreciation: Residential real estate values tend to increase over time, providing a potential source of long-term wealth accumulation. 
2. Regular cash flow: Rental income from residential real estate can provide a reliable source of cash flow for small businesses. 
3. Diversification of investment portfolio: Investing in residential real estate can help small businesses diversify their investment portfolio, reducing risk exposure. 
4. Hedge against inflation: Real estate investments can provide a hedge against inflation by increasing in value over time, even when the value of currency declines. 
5. Tax benefits: small businesses can benefit from tax deductions on expenses related to owning and operating a residential property, such as mortgage interest, repairs, and maintenance. 
6. Potential for renovation and capital gains: small businesses can increase the value of their residential properties by renovating and improving them, which can result in capital gains when they sell. 
7. Tangible asset class: Residential real estate provides a tangible asset that can be seen, touched, and experienced, unlike stocks and other financial investments. 
8. Lower volatility than the stock market: Real estate investments tend to be less volatile than the stock market, providing a more stable investment option for small businesses. 
9. Control over investment: small businesses have more control over their residential real estate investments, as they can make decisions about tenants, rental rates, and property management. 
10. Potential for passive income: small businesses can generate passive income from rental properties, which can provide a steady stream of income without requiring active management or time commitment. 

Note that investing in residential real estate also has its risks and challenges, such as potential property damage, vacancies, and tenant issues. It’s important to thoroughly research and evaluate any investment opportunity before deciding. Therefore, it is suggested that investors take professional advice from accredited and licensed Accountants, Financial Planners, Financial Advisors, and Buyers Agents. 

About the author – Ritesh Tandon (MBA, LREA, CEA) is the founder of Nest or Invest – Buyers Agents, a buyer agency based in the northern suburbs of Lalor in Melbourne. One of the most trusted buyer’s agency with 10+ years advisory experience. They have helped 100+ clients save $10,000+ and create $100,000+ in equity and wealth. Homebuyers can meet them at exhibit C4 at the CommBank Small Business Expo on the 24th and 25th of May 2023.