When it comes to investment, there isn’t one more popular than real estate. As the saying goes, 90% of millionaires make their money from buying properties around the world. Of course, it isn’t only the rich and famous who increase their wealth via houses and office buildings. Ordinary people use it as an accessible and affordable way to boost their monthly budget.
There are obvious benefits, none more self-evident than the fact that people understand property. Unlike stocks and shares, real estate isn’t a foreign concept, and that means investors can be confident in their abilities to add a quality project to their portfolio. Let’s not forget about the tax advantages, either. If you’re looking to keep your hard-earned cash out of the hands of the IRS, then real estate is an excellent option.
Still, these aren’t the main reasons it continues to be a popular and lucrative form of investment to this day. Continue reading to find out why real estate stands out from the crowd.
It’s Not Volatile
No investment is guaranteed to succeed, which is why you should diversify your portfolio to minimize risk. However, owning property is a little different because you can hold on to it for longer without having to worry about the consequences. This is due to the fact that the market goes through peaks and troughs.
As a result, a loss can easily become a profit in a matter of weeks or months. Better yet, the potential ROI is very high if the market booms in the right manner. With positive equity, you have the opportunity to capitalize on other opportunities while the value of your property increases.
The stock market, on the other hand, changes on factors that are out of control. Therefore, you don’t get the same level of control as you do when you own a house or office space.
Real Estate Value Never Hits Zero
When you have shares or bonds, there’s a chance that your investment can tank and fall to zero. With this risk, you must accept that there is no way to accrue any money for your venture and that you might lose all the funds you pumped in. Owning property is different. For starters, they are never worthless like stocks, so you can limit the damage even if you make a loss.
Another interesting factor that makes real estate a tangible asset is the land. In a world where space is at a premium, land sells for a high rate. If you own property, you have the ability to leverage the plot to build your ROI or break even if things go bad.
You never know which neighbor will bid for your land if you’re looking to sell. Everyone wants to improve their home, which means you won’t be short of suitors.
You Can Use It As A Nest Egg
The traditional method is to buy a property and pay off the mortgage. Once you own it outright, you can downsize and use the profit to see out your golden years. It’s an age-old trick that has worked well for years and will continue to do so. However, it’s not the only option at your disposal.
You might not have heard of a self directed IRA real estate fund before, but it’s worth researching. Like a regular retirement account, it uses your savings to build a nest egg for when you decide to quit full-time work. Unlike a traditional or Roth IRA, though, it lets you invest in different assets, such as real estate.
There are some pitfalls, but the fact that you use a well-known avenue for investment negates most of them.
It’s A Steady Stream Of Income
What is your plan? Buy a property and flip it for a quick profit, or do you prefer to wait until the market peaks before selling? Regardless, you have the option to rent and create a steady stream of income throughout the year and the coming years.
It’s not as straightforward as it sounds – you need quality tenants – yet when it works, it’s very lucrative. Plus, it’s almost as if it’s a free shot at increasing your wealth. Although you have a mortgage, the rent you charge pays off the loan until it’s paid in full.
Then, you can sell for a pure profit, or continue to rent out if you want to keep the investment in your portfolio.
Real estate is undoubtedly flexible and full of options. Does that appeal to you as an investor?
