Purchasing real estate is one of the safest and most lucrative long-term investments you can make. Granted, it does come with its own set of caveats. For one thing, it lacks liquidity, meaning it is a long-term investment that cannot be readily converted into cash (unlike stocks). You also need to shoulder the costs necessary to maintain any kind of property. But in this piece, we will focus primarily on why real estate is still a good investment.
Despite these limitations, real estate can be the highest-earning asset class in your investment portfolio. In fact, most millionaires have earned a great portion of their wealth through real estate investments alone.
Investing in real estate can offer a steady flow of cash and high returns, greatly increasing your finances in the long run. Additionally, real estate properties like houses are very practical, as they can offer you a place to live while acting as a form of income.
While it may seem challenging to find the right properties to invest in, modern-day technology can make your real estate search easier. For example, many properties for sale use real estate text riders that display a phone number and simple numeric code. You can easily access a digital flyer with all the details of a property—and its real estate agent’s contact information—when you text the code to its respective phone number. This way, you can quickly search through properties without fuss.
Now we’ll highlight the four primary benefits of owning real estate.
1. It’s a Safe and Tangible Investment for Anyone
One of the main reasons why so many people opt to invest in real estate is because property is tangible. This makes it a reliable asset. Adding real estate to your investment portfolio can diversify it while lessening its overall risks.
You might be thinking of investing in stocks, or even cryptocurrency, but it is important to note that these kinds of investments are intangible and will be far more volatile. For these kinds of investments, you do not have full ownership over them. And because they are heavily influenced by factors outside of your control, their value can quickly change at any time.
Although prices in the real estate market are still prone to fluctuations, a piece of property will always have value. You can always decide to sell it. Though it might take more time to sell a property, you can at least be assured that you will walk out of it with some profit, especially if you’ve been sitting on that asset for quite some time.
Additionally, it can be difficult to earn money from stocks if you don’t have industry knowledge. On the other hand, anyone can enter the real estate market, even first-time buyers. The constant demand for real estate will almost always offer higher returns and more benefits over the years. Even to those who are unfamiliar with the market.
2. It Always Appreciates in Value
Properties always hold value, and this value will increase over time. The amount of available land is scarce compared to the number of buyers. This situation is beneficial for any real estate investor, as it leads to a rise in value for most properties.
Of course, there is no guarantee that every property will appreciate in value. The value appreciation on your property will depend on a number of things, like the desirability of its location and how well-maintained it is. However, with some time and effort, it is possible to reap the benefits of almost any real estate investment. In fact, by simply maintaining a property, its value can increase by about three to five percent every year.
3. Investment Properties Increase Your Cash Flow
Real estate offers great opportunities to increase the amount of income that your property generates. By renting out your property you can also earn a monthly income. Doing this adds additional financial benefit on top of the appreciation of the property.
You may not want to manage your investment properties personally, but you can always hire a property management company.
While most properties naturally appreciate in value, you can increase this even further through renovations. For example, renovating a kitchen or replacing the flooring of a house can certainly raise its worth. With the right renovations, you might gain more from a property than what you initially bought it for. When deciding on what to renovate, it is best to ask help from an expert Realtor to ensure that you are making changes that will yield the most returns.
4. Gain Access to Plenty of Tax Benefits
Investing in real estate also comes with a lot of tax benefits. This is a lesser understood reason why real estate is still a good investment. Consult your tax advisor prior to purchasing any investment properties so that you can formulate a smart plan of action.
Many of the tax benefits come in the form of “write-offs” or tax deductions. You can receive deductions on mortgage interest, repair and maintenance fees, insurance, and property taxes, among others.
Real estate may not be everyone’s most favorable investment, but it is certainly an investment that favors everyone. Whether you are investing for the first time or you are a seasoned investor, there is no doubt that real estate investments are a dependable way to gain high returns for many years to come.