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10 Reasons That Make Real Estate the Best Investment

Andrew Carnegie, the billionaire industrialist, could not have been more succinct in stating, "Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate."

Since the last six years, house price growth in the US had remained steadfast. However, the market has begun to cool in current times. According to S&P/Case-Shiller, the national home price index rose by just 3.13 percent during the year to Q2 2019 – the lowest growth since Q3 2012 .

According to UpNest, a real estate website, this slowdown in house price growth makes it the best time to buy a home. Real estate remains one of the best investment options, since it generates passive income. And if its value increases over time, it can be an excellent long-term investment to create wealth.

Let’s see what all are the reasons that make investing in real estate worth it:

#1 Better returns than the stock market

Unlike the stock market, there is a minimum risk in real estate. Even if the market is down, you can hold on to your property without the risk of loss. And once the market brightens, so will the value of your property. Also, unlike stocks, real estate gives you more control over your investment, since the property is a tangible asset that can be leveraged to benefit you.

#2 High tangible asset value

Property never becomes valueless, unlike other investments that can disappear or decrease over time. You can even take homeowners’ insurance to protect your real estate investment.

#3 Value always increases over time

It has been observed that the longer you retain your property, the more returns it will give. Even when the value of your real estate fails to appreciate, merely tiding over uncertain times will get you back on the track to better times when the value starts to appreciate.

#4 Helps diversify the portfolio

Diversifying helps in spreading out the risk. And diversifying into buying real estate is a safe bet that helps mitigate the risks. Even as a stand-alone investment, real estate has helped many to amass wealth.

#5 Earn residual income

Earning a residual income, also known as ‘cash flow,’ is one of the primary reasons for investing in real estate. Incidentally, cash flow, which is income earned from property investment after paying all expenses, may become an invaluable addition to your investment portfolio.

#6 Tax benefits

There are numerous tax benefits for those investing in real estate, such as tax deductions on mortgage interest, cash flow from investment properties, operating expenses and costs, property taxes, insurance and depreciation, and other benefits.

#7 Protects against inflation

For real estate investors, inflation can be advantageous. Whereas bonds, etc. can get undervalued due to inflation, home and rent values increase during inflation. Even the value of a real estate investment can increase due to inflation. This, in turn, makes it easier to pay back mortgage debt over time.

#8 Ongoing income source

Renting out property puts money in your hands every month. This ongoing source of income helps in building wealth over time. Unlike other investments that need to be cashed in, you get ready money from real estate. Saving this money can help in buying other properties that boost the investment portfolio.

#9 Provides more control over investment

If you have invested in assets other than real estate, their value is dictated by the external markets. For example, a company you have invested in may hire a new CEO whose wrong decisions may drive the price of the company’s stocks down, thereby making you lose money. In this, you have no say. On the other hand, investing in real estate is really in your hands. You have a say on the place you want to buy property, how to renovate it, and whom to rent it out to.

#10 Best retirement plan

If you are heading for retirement or looking for early retirement, there can be no better monetary safeguard than investing in a rental property. Little wonder it is considered one of the best retirement plans. Your property will help you in generating regular and steady income when you have happily retired.

Investing in real estate

Before you even think of investing in real estate, consider the following points:

  • Avoid borrowing money for real estate investment; best is to pay in cash. If this is not possible, then you should be able to afford mortgage payments, even without rental income.
  • Before you invest, calculate the cost of taxes, utilities, upkeep, and repairs of the property you intend to buy.

Conclusion

Real estate is one of the safest financial investments. It not only gives handsome returns but also safeguards your golden years, after retirement.

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