According to research, real estate was rated as the top long-term investment. Gold, stocks, savings accounts, bonds, and mutual funds followed. It’s the same all around the world. The emotional satisfaction of owning land is strong ad experts believe that the demand for land will only increas with time.
Some experts like Comble Property Management suggest that if done correctly, real estate is the highest-earning asset one can have.
Don’t believe us?
Here are some of the most prominent reasons you should invest in real estate.
1. Good Returns; Less Volatile
Aren’t these the four words every investor wants to hear? Almost every asset with good returns is increasingly volatile or risky (e.g. the stock market), but when an asset isn’t volatile or risk, it doesn’t provide great returns (mutual funds).
So is there a middle ground?
Yes!
Historically, the risk in real estate reduces as you hold to your property. When the market starts to improve, so does the value of your asset, because of which you build equity. On the other hand, the risk in the stock market never changes, and several other factors are beyond your control. On the other hand, real estate gives you more control and a tangible asset you can capitalize on with several revenue streams.
2. It’s a Safe Investment
That alone is a good enough reason for you to invest in real estate. In a world where nothing is certain, investing in a safe asset can be a blessing. When investing in real estate, your asset is secured by itself – the property you own. You’re going to see your investment lose value in rare cases, and even if it does, it will only be for a short period.
Unlike fiat currencies, e.g. USD or CAD, your asset won’t lose value because of inflation every year. It will outperform against those treacherous waves of inflation. A smart investor may also set themselves in markets that perform well by short-selling as did several investors during the 2008 global crisis.
Short-selling: Betting against the market. When the market goes down, you earn money.
3. There Are More Than One Way Real Estate Prices Can Appreciate
A lot of property management companies think that with real estate, not only will your asset appreciate the values of the market, but you can also force appreciation. Think of it this way: natural appreciation generally occurs as market values improve. On the other hand, forced appreciation is the equity you can earn by putting in money.
Installing new windows? They’ll increase the value. Got the roof done or renovate the garage? That will increase the selling price, too. This happens because as soon as you renovate the house, you’re able to charge a higher rent which, in turn, increases the value of your home.
4. It Gives You a Chance to Diversify Your Portfolio
If you’ve ever spoken to a financial advisor, then you’re probably aware of the importance of diversification. When you have a diversified portfolio, you spread the risk of your investments onto different asset classes.
Real estate, in this case, will act as the tangible asset you use to mitigate the risk from your portfolio. Several landlords have amassed a fortune by investing only in real estate.
5. You Can Pass It Down to Generations
Not only are you transferring a tangible asset to the next of kin, but the transfer is easy to make. Several people with developed real estate assets pass them down to their children or other beneficiaries, which can also help them defer some of the taxes.
Wrapping Up
Investing in real estate is not only a safe option for landlords but it is also one of the easiest asset classes to manage. It will yield some of the highest returns for any portfolio year after year. Do this right, and you may end up retiring before the designated age.
Good luck!
