With the world starting to recover from the Great Recession of 2008, many people are coming out of their shells and seeking out new investments for the new decade. While playing the stock market is always fun, it’s not always the most reliable. Investing in tech companies is also a new trend, but with the instability of the tech industry, it may not be the wisest.
Real estate, on the other hand, is still a great investment. Yes, it might not be the sexiest or most exciting (I have a 7% ROI on a particular Real Estate investment in the East Coast. It’s not much but, hey, it’s something!), but it still hands-down the safest, and if you play your cards right, most lucrative investment you can make. Real estate investments can yield you great tax advantages and are a solid base to build your financial portfolio.
Here are more reasons why you should think about real estate investment:
It’s Safer than the Stock Market
Movies like “Wolf of Wall Street” or “The Big Short” have always made the stock market lifestyle look sexy and desirable. But at the end of the day, anybody who’s anybody knows that investing too much in the stock market is folly. That’s because playing the stock market is a lot like playing poker: while there are things you can to do minimize the effects of randomness, too much of what it takes to “win” relies on good old-fashioned luck (and beware anyone who says they have a surefire and accurate way to predict market trends: that usually involves insider trading or black magic, and you don’t want to get mixed up in either!).
Investing in real estate, on the other hand, is not as exciting, but it’s so much safer and, if you invest properly, would yield more than any stock you invest in. That’s because the real estate market is so much more stable than the stock market, which means better returns without the volatility. Unlike stocks, the risks you take on in real estate investments are minimized by the amount of time you own that particular piece of property.
This means that, if the market improves in your area, the value of your property also improves. This is the fastest and surest way for you to build equity. Not only that, you have more control over your investment because real estate is a tangible asset. This means that you can use your real estate as leverage as a possible revenue stream, all the while enjoying appreciation of capital.
It’s a Tangible Asset with High Value
Stocks gain and lose value based on how the market swings at a particular given time. One minute, you can be rolling in dough, and the next, it dips down to 0. Other investments can be just as risky, like classic cars (which devalue over time) and tech companies (remember Napster?).
Real estate, on the other hand, will always have value: your home and the land it sits on will always have a price tag in the thousands. To protect your asset from recession, home owners insurance can shield you from any market devaluation, ensuring that your investment will always be in the black.
It Increases in Value Over Time
Don’t take my word for it: history shows us that the longer people hold on to their real estate investment, the more money they make. Yes, there will always be bubbles and recessions, but the housing market has always recovered. Even the Recession of ’08 shows us the staying power of real estate, with people who held on to their real estate investments during that tumultuous times now enjoying normal prices and appreciation.
With current trends, real estate investors are expected to get a major windfall in the next couple of years. In fact, a recent study of real estate markets across the country saw that every single state, from Alabama to Wyoming, saw positive appreciation in the past year alone. And with the world economy stabilizing thanks to conservative investments from major countries, this appreciation can only go up from here.
It Can Diversify Your Investment Portfolio
Financial planners love to tell you about diversification, which is good. After all, you don’t want to have all of your million-dollar eggs in one basket! Diversification doesn’t just mean multiple income streams, it also means that you spread out risk thus minimizing the chance of one investment bringing financial ruin.
Because real estate is a tangible asset, it remains a safe and steady buffer against risk and is one of the most effective ways of amassing wealth due to its stability.
It comes with Great Tax Benefits
Real estate investments are one of the best ways to mitigate loss of capital via taxation. In the United States, you can get multiple tax deductions with your real estate investment, including, but not limited to:
- Deductions on operational costs and expenses
- Property tax
- Insurance costs
- Protection against depreciation
- Mortgage Interests
- Cash flow from investment properties
- And many more
Of course, it can take a lot of work to take advantage of all these benefits, but add these can add up over time, and you’d be surprised how much money you can save in a 2 or 3 year span.
An Investment of a Lifetime
Real estate investments are not for people who want to make a quick buck; instead, it’s for people who want multi-generational protection of their assets. But beyond the obvious advantages, investing in real estate also means the creation of a homestead, a solid base for you to start a family, and for that family to have a constant place that they can have fun and build memories.
It also gives you an opportunity to explore the creative entrepreneur in you, with real estate investment offering people an endless amount of investment options to turn their tangible asset into a lucrative income stream.
What do YOU think of real estate investments? Do you have other investment options in mind? Get in touch with us and tell your story!