Real estate has always been a favorite investment asset class for the wealthy, and for good reason.
But did you know that you don’t have to be wealthy to invest in real estate? In fact, real estate investing can play a big part in your becoming wealthy!
While many people believe that real estate investing is only for the rich, the truth is that anyone can invest in real estate and achieve financial success. In fact, owning investment real estate can be one of the best ways to build wealth and secure your financial future.
With investment real estate, someone else is paying your mortgage! Owning a property and having a fixed-rate mortgage can help you build equity and increase your net worth over time. Even during downturns, owning a property provides you with a valuable asset that can appreciate in value and generate passive income through rental payments.
Furthermore, in an inflationary environment, like the one we have been experiencing, owning property with a fixed-rate mortgage can be especially advantageous. As inflation picks up, the cost of the mortgage declines in real dollars, while the principal value of the home increases with inflation. This one-two combination is one of the reasons why so many people have built wealth through real estate investing!
Real estate is a great asset class to consider investing in. Here are 13 reasons why:
- Real estate is a hedge against inflation. If you own a rental property, for example, you will benefit from higher rents and capital appreciation, making it a powerful combination for wealth creation.
- Real estate is a money-making play on inflation. With higher inflation expectations, you can benefit from property price appreciation and rental price appreciation if you own rental properties.
- Generational wealth transfer is possible with real estate. Passing on property from generation to generation can make their lives a little better. Owning your primary residence earlier in life is also advantageous.
- Little effort is required to build wealth with real estate. Researching the property you want to buy and finding the right tenants is the most significant effort required. Once you’ve screened applicants, you can set it and forget it.
- Real estate generates tax-free profits. The first $250,000 in profits for singles and $500,000 for couples is tax-free if you live in your property for the last two years before sale. Real estate is a very tax-efficient way to make money.
- Real estate serves a utility function. Property addresses a fundamental human need, shelter. Unlike cash, which serves no utility function, if our financial system goes to hell, at least you will have a tangible asset you can actually utilize.
- Real estate provides semi-passive income generation. You can benefit from rising rents due to inflation, job growth, and income growth. Owning public REITs and taking advantage of real estate crowdfunding can also earn healthy returns.
- Real estate is almost dummy proof. As long as you run the realistic cost and revenue numbers based on data provided by the seller and comparable properties, you have a base case assumption. You don’t have to be a genius to make money in real estate.
- Real estate offers diversification. If you have the majority of your net worth in stocks and bonds, adding real estate to the mix can offer valuable diversification benefits. Real estate has historically had a low correlation with the stock market, meaning it tends to move independently of the stock market. This can help reduce overall portfolio risk and potentially increase returns.
- Additionally, real estate offers the opportunity to invest in different types of properties, such as commercial, residential, or industrial. Each type of property has its own unique risks and rewards, providing even more opportunities for diversification.
- Real estate allows for creative financing. Real estate investing offers many creative financing options that can help you get into a property with less cash upfront or generate even more profits. For example, you could use a cash-out refinance to access the equity in a property and use the funds for another investment. Or, you could use seller financing to purchase a property with little to no money down.
- These financing options can help you maximize your returns and build wealth more quickly than if you were limited to traditional financing options.
- Overall, real estate investing can be a powerful tool for wealth creation and financial security. With its potential for hedge against inflation, tax-free profits, diversification benefits, and semi-passive income generation, real estate is worth considering as part of any investment portfolio.
Have you explored this opportunity to build your wealth and secure your financial future? Contact us to learn more about how you can benefit from investing in real estate and start building your portfolio today!
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