Experts agree that investing in real estate is one of the best ways to grow your wealth, so it’s no wonder why many people prefer it over other popular investment options like stocks and bonds.
In addition, real estate is considered one of the best long-term investments because it’s relatively safe. While the market fluctuates depending on the economy, home values increase, so there’s no reason not to invest in real estate if you can because it will continue to grow in the long term no matter what happens. Here are just a few of the reasons real estate is the best investment.
Safe
Real estate investing is considered much safer than other types of popular investments, such as stocks. Stocks come with some level of uncertainty and are easily more risky than real estate. To generate significant wealth with stocks, you need to have the required skillset to make money from leveraging trades.
On the other hand, investing in property doesn’t require specialized skills. Virtually anyone can begin investing in real estate if they can afford to buy a house. Real estate investing also has better returns in the long run because home values continue to rise, whereas stock values can drop suddenly and drastically.
Yields High Returns
Make no mistake; real estate investing is a long-term investment, but it can yield great returns in the long run. More people have become millionaires from real estate investing than any other type of investment. Additionally, as the population increases, there’s only so much land to go around. The demand for housing will continue to grow, making returns higher and higher as time passes.
Even if you’re just a simple homeowner who invested in one house that they use as their primary residence, you can expect to sell your house for tens of thousands of dollars more than you purchased it for, allowing you to buy another house or pocket some of the cash you earned for retirement.
Regular Income
If you choose to invest in real property and become a landlord, you’ll have assured regular rental income every month. Unlike with stocks, once you own a house, you don’t have to deal with shifts in value overnight. Instead, owning a home or property can give you a regular monthly income that increases over time along with the value of the property.
An Investment in Your Future
Many homeowners purchase a house not because it’s a great investment financially but because it allows them to invest in their future. While buying a house is cheaper than renting in the long run, it also provides you with the space you need to grow your family or create a home business. Having a house also gives you the benefit of a yard, so even the family dog will appreciate this investment.
Additionally, since you don’t have to deal with paying rent anymore, you can take the next step towards retirement. As you grow older and the children move out of the house, you can downsize. Downsizing allows you to take the money you earned by selling your house to purchase a different property that may cost less. You can do whatever you want with the money left over, but we recommend putting it towards retirement so you can have more freedom when you’re no longer working.
Appreciation
As we’ve already mentioned, home values naturally appreciate on their own, but you can also force appreciation. Real estate appreciates about 3 to 5 percent per year without the homeowners lifting a finger. However, you can increase the rate of appreciation by renovating your house or making major repairs, such as giving it a new roof or updating the kitchen.
Unfortunately, not all renovations will increase your home’s value, so it’s best to talk to a real estate agent before you break out the sledgehammer. Remember, you won’t get a dollar-for-dollar return on repairs or renovations, but some renovations can give you a higher return depending on the local market.
Tax Benefits
Real estate investors can take advantage of write-offs if they own property and rent it out. However, while the investment might be worth it, you’ll still be a landlord and have to deal with all of the hassle of being one, including being available for tenants and scheduling timely repairs. As a business owner, you can write off everything from mortgage interest paid on the loan to maintenance and any other landlord expenses.
Financial Security
Real estate investments can help you feel more financially secure because your property appreciates over time. While the market may experience some dips here and there and lose some value from time to time, it typically bounces back as long as you view it as a long-term investment.
Real estate can also help you supplement your income if you work a full-time job to save more money for retirement. Additionally, you can have recurring income even after retirement if you become a landlord or sell a house you’ve owned for many years to make a profit.
Options
There are many different options for investing in real estate, though some are better options for newcomers. For example, buying a house and renting it out is fairly easy if you can get the loan and afford the down payment. Additionally, you purchase a multi-family property and rent it out while living in it so you can earn money towards your mortgage payment through rental payments while taking advantage of the living space you have available.
The most common type of real estate investment is house flipping, which many people know about because of all the different television shows dedicated to it. House flipping allows you to purchase an undervalued home, fix it up, and sell it for a property in as little as a few months.
Final Thoughts
Real estate is a great investment option if you choose to invest in nothing else. However, it’s also a great way to diversify your portfolio to make your money work for you and earn more over time.
Whatever you choose to do, buying a property is a great way to increase your net worth while providing you with peace of mind.
