There are a lot of reasons for being self-employed, but one of the biggest is to have control over how much money you earn, and ideally to make a lot of it. But there’s not always a steady stream of income, or a pot of gold at the end of the entrepreneurial rainbow for many who go that route.
Those slow months, or gaps between paydays, can make it tough to pay the bills, let alone yourself at times. So investing in real estate might not sound like a great idea—or even possible—but this Entrepreneur article gives solid reasons why it might be the best decision you could make, such as:
- Real estate can be a source of business funds. When you need some money to tide you over during lean times in your business, or want to grow it, you can tap into equity in your property by refinancing and taking some cash out, or open up a line of credit against it.
- Even more tax deductions. Being self-employed allows you to write off many things related to your business already, but owning a property creates even more opportunities to do so.
- It can create monthly cash flow. If you buy a property with multiple units, you can use part of it for your own business, and rent out the rest to pay your monthly mortgage, and ideally generate additional monthly income. (Of course, you’ll need to make sure the numbers work before buying a place, and will need to make sure you keep vacancies to a minimum.)
- It’s a hedge against inflation. As you may have been hearing a lot lately, owning real estate is a great way to hedge against inflation. As this Fortune article points out, monthly rents tend to keep pace with inflation or even go up. So if you own a property with rental units, you benefit from increased monthly revenue, and if you use it as a place for your own business, you’re not at the mercy of paying a landlord the rising rental prices during an inflationary period. For that matter, your rent will almost always go up over time, so owning a place is a great way to keep that cost steady for years to come.
If any of those things make investing in a property appealing to you, here are a few things to get you on your way:
- Find out how much you can afford to spend. Speak with a bank or mortgage company and get pre-approved for a loan. The amount will likely vary depending upon whether there are rents on the property and how much they are.
- Find a real estate agent to help you find the perfect property. There are a lot of different types of property that might fit the bill as the perfect investment, so make sure to work with a real estate agent who can help you identify all of the different options available in the market.
- Be patient. Depending upon where you’re looking, there may or may not be a lot of options on the market. Don’t rush to buy just any property that happens to be on the market, and don’t give up because there doesn’t happen to be any at the moment. Give it time…
- Make sure the numbers work. While investing in any property will likely pay off over time by increasing in value and allowing you to take depreciation and other tax write-offs, try and find one that will produce positive cash flow.
- Don’t stop at one. While you probably shouldn’t dive into real estate investing by buying several properties all at once, do consider adding other properties over time. Once you own a property and know that you’re able to carry it without financial concerns, look for another one to buy that will also produce positive cash flow. And then another…
Eventually, you might be able to get to the point where our real estate holdings end up being what not only helped you survive the downtimes of being self-employed, but actually became the thing that made you wealthy and able to not have to work…unless you want to, of course!
If you’re self-employed, the chances are you’re going that route in order to be able to make as much money as possible, rather than capped by a company or boss who decides how much you make. While the upside potential is appealing, it isn’t always a smooth ride and you can go through periods of time where cash isn’t flowing in, or you could use some money to invest in the growth of your business.
Investing in real estate may be a great solution for you to survive during lean times, and even grow your business. It could also end up becoming the greatest source of your income and wealth over time, like it did for so many of the wealthiest people in the world.