The Main Benefits of Construction Investment

Investment in a journey requiring due diligence to ensure your funds are being channeled into a worthwhile investment. Are you thinking about spending your money on real estate development? Do you have a piece of land that you want to partner with a real estate development company to develop? This article is for you. We delve into the benefits of investing in construction. You may ask yourself how to start your investment journey in real estate. Let's dive in.

How do you Start Investing in Real Estate?

There are several stages of cooperation, starting from investment, construction, and finally the sale of finished real estate that would lead to you getting a return on your investment.

  1. Investment.
    Investment in the construction industry starts with due diligence on the company you wish to enter into a partnership. Take your time to go through their construction portfolio and understand how investing in real estate works. You will need to identify the various investment options available to you to determine what is the most suitable to your needs and available capital
  2. Construction.
    Once you have identified the construction company to invest in, the construction process can start. At Fortress Home, we carry out the construction process by ourselves. We have a permanent team of experts in every construction aspect. The entire process is very transparent, and you will be involved and informed of every action we take.
  3. Sale of completed real estate.
    Your investment in the construction business will bear fruit on the completion of the project. At this point, the property will be placed on the market and sold at a tidy profit. You may choose to earn a regular income from the property by renting it. This leaves you the option of selling later when your investment's value has appreciated.

How do you earn passive income from real estate?

Investing in real estate companies offers you the opportunity to generate passive income. Provided you take the time to research the construction companies, you can earn passive income through real estate. Given that you will not be playing a primary role in the construction project, the company's reputation offers insight into the expectations you can have for your investment. General building contractor provides a full spectrum of construction services.

Creating passive income means that the method of generating it will require minimal effort from you. So do not be worried. You will not need to learn about the construction industry. You need to find a trustworthy and reputable construction company.

There are several questions you will need to ask yourself before committing to investing in the construction project.

  1. How much will you spend?
    The goal of investing in real estate is to make the most money possible from the project. Start by taking a look at your finances to determine your liquidity levels. If you are new to the idea of earning passive income through real estate investing, choose an investment amount that you can pay in all cash. You will not have bank interests eating into your margins from the sale of the property.
  2. What is the location of the property you want to invest in?
    Take a look at the neighborhood of the property with investment opportunities. At Fortress Home, we provide details on our projects, including the nearby schools, public transportation, expressways/highways, and other amenities. Homes in areas with good schools and other amenities tend to appreciate in value more than those lacking the amenities.
    Suppose you are investing in real estate to earn regular income through renting. In that case, the type of neighborhood will determine the kind of tenants you will attract. Good communities will lead to reliable tenants with minimal chances of damaging your property or having irregular rent payment habits
  3. What type of property should you invest in?
    Once you decide what you want to get out of the investment, you can figure out where to channel your investment. You may want to earn a profit from the property's sale once construction is complete or hold onto it for a few years before selling. You may also want to earn ongoing income from the property by renting it.
    Consider that foreclosures, fixer-uppers, and other older properties will require additional investments to improve the valuation. Investing in new construction means getting a home constructed with the latest technology and up-to-date fixtures and fittings. You will not need additional investments to get the property ready for the buyers or tenants.
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What are the tax incentives for investing in real estate?

The benefits of investing in real estate extend to several tax advantages. You can deduct the costs incurred in developing the property when filing your tax returns. The tax deductions can last for decades since property is considered a long-term investment. Suppose you choose to invest in residential property. In that case, you can deduct 3.6% of the property's value from your taxable income for a period of 27 and a half years. This means that you can use depreciation tax provisions to minimize your income tax amount to allow you more disposable income.

Reap the tax benefits of real estate investing when you rent out your property. Self-employment income tax does not apply to the rent amount your tenant pays every month. Property investment has other tax benefits in tax breaks ranging from property taxes, legal fees, travel expenses, repairs, insurance, and property depreciation. Finally, ask your task agent about a 1031 exchange for capital gains deferment.

What are the cash flow opportunities from investment activities

To understand cash flow from real estate investment activities, you need to start with return on investment (ROI). Once you have chosen to invest in a real estate project, you expect returns either in the short term or in the long term. Investors who focus on a short-term ROI will enter into the deal with the plan to sell the unit once construction is complete. Those who eye long-term ROI may choose to invest with rental units in mind or holding onto the property until there are favorable market forces to maximize the ROI.

What is a good ROI in real estate investment?

Your risk tolerance will define a good return in real estate investments. The average returns on the S&P 500 are the acceptable benchmark for most investors and analysts. That means that any investment that can earn a higher amount than the S&P 500 average is considered good. The S&P's average rate of return over the past 50 years has been approximately 8%.

If you are thinking about investing in real estate, you are in good company. The wealthy 1% in the world have consistently included real estate in their investment strategies. Real estate often out earns every other method three to one.

What are some tips for ensuring success in multifamily investing?

As long as you employ an effective strategy, you are bound to reap the lucrative fruits of investing in multifamily.

The housing crash of 2008 led to many people opting for renting as opposed to buying homes. In addition to that, the millennial generation is now part of the growing workforce. The generation has experienced a recession and a pandemic in their formative years, which informs their housing preferences.

Multifamily investments are deemed recession-proof for seasoned investors. While businesses can move their operations online or to other locations, families will always need a place to live. This means that in the event of a recession, commercial real estate may suffer, but multifamily real estate will primarily maintain its returns.

Players in the real estate sector and new investors have been aware of multifamily real estate lures. The market has become competitive, but there are still many great deals to be made. As a new investor, you need to take the time and complete your due diligence to land on a suitable property and Construction Company.

When looking for the “New home builders near me”, always pay attention to the ratings and the customer reviews.

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From the experts' mouths, here are some questions you need to ask yourself to ensure you get the most value for your investment.

1. Do I have enough information about the market?
Most investors focus on scouring properties all around the country to find good deals. Remember that despite the process seeming like the right approach, you need to take plenty of data into account before making an informed and objective decision about the deal. While there are many factors to be taken into account, try and focus on the location primarily because it offers great insight into the deal's prospects.

While researching the location, try and find out key factors such as population trends, dominant employers, the area's appeal, and what other landlords offer. This will help inform you on the suitable development to set up in the area, what amenities to include, and whether you should make the deal at all.

The beauty of technology is that you will not need to be on the ground to talk to key players such as principals, property managers, and agents in the area. They possess vital insights unique to the area that will prove instrumental in your investment decision. During the process, you may need to draw up a business plan. All the information you would have collected will ensure that the plan identifies the critical elements in ensuring it is fully optimized for maximum returns.

2. Can I handle this project alone?
If you have previously invested in single-family homes, you may have noticed the simplicity of the project. Multifamily homes have many variables that you will need to keep under control to ensure the project succeeds. Build a diverse team that will manage to handle all the moving parts efficiently and effectively.

Our Fortress Home family comprises a team of experts that can capably handle every step of your construction process

You will not need the extra effort to vet every member of your team since we've already got it handled. We are a family-owned construction company that is closely knit, loyal, and highly experience, as you may see from our rich portfolio.

You want this investment to offer you security, returns, and peace of mind regarding the future. But working alone puts you at risk of overextending yourself if you do not have a trustworthy and reliable team that shares the responsibilities. If you are an out-of-town investor, it may not make sense to be making constant site visits. You can rely on someone local to be your point person on the ground. The selected person should have the track record to attract financial institutions and other investors. They should have the analytical skills to create project plans to factor in all the variables and generate a profitability path.

3. What is my plan for this investment project?
Without a plan, you may face challenges in generating cash flow from renting the units. At this point, you may elect to put up the property for sale. The challenge with this step is that without an operational strategy, you may not profit from the sale of the property.

Take the time to create a plan that considers the missing elements from the profit equation. That way, you can minimize operating expenses and maximize revenue. The plan should be centered on these two efficiency factors. Make sure your plan is comprehensive enough to cover all aspects. It considers all avenues to get a return on your investment.

About Fortress Home

Fortress Home is a family-owned construction company based in Chicago that offers investment opportunities in real estate. We are a trusted organization that has spent years cultivating relationships with all the key players in Chicago's construction business.

Our unique selling proposition is that we handle all the aspects of the construction process without requiring contractors' input. We have experienced experts in every department that have been with us since the beginning. Read more about our construction process here.

We ease the investment process since you only need to check the reputation and background information of a single company. Our founder has strived to create a culture of honesty and competency that allows our investors the peace of mind to trust us to deliver the desired results with minimal fuss. Start the investment journey with Fortress Home today.

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Fortress Home combines the roles of a general contractor, a construction partner, and a construction manager. Our talented workforce helps us professionally manage all aspects of on-site construction.

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