The Honest Broker: Is Real Estate Actually the Best Investment
BY: DIANE LOTT, BROKER PARADISE FOUND REALTY, INC
In my opinion, investing in real estate is one of the best ways to grow your wealth, and why many people prefer it over other popular investment options like stocks and bonds. In addition, real estate is considered one of the best long-term investments because it’s relatively safe. While the market fluctuates depending on the economy, home values increase, so there’s no reason not to invest in real estate if you can because it will continue to grow in the long term no matter what happens. Here are just a few of the reasons real estate is the best investment.
Real estate investing is considered much safer than other types of popular investments, such as stocks. Stocks carry a level of uncertainty and are easily more risky than real estate. To generate significant wealth with stocks, you need to have the required skill set to make money from leveraging trades. On the other hand, investing in property doesn’t require specialized skills.
Virtually anyone can begin investing in real estate if they can afford to buy a house. Real estate investing also has better returns in the long run because home values rise, as opposed to stock values that can drop suddenly and drastically.
Real estate investing is a long-term investment, and it can yield great returns in the long run and provide for more financial security. More people have become millionaires from real estate investing than any other type of investment. Additionally, as the population increases, there’s only so much land to go around.
The demand for housing will continue to grow, making returns higher and higher as time passes. Even if you own one, primary home, you can expect to sell your house for tens of thousands of dollars more than you purchased it for, allowing you to buy another house or pocket some of the cash you earned for retirement. Investment in real property and becoming a landlord, can produce a regular rental income every month along with an increase of value of the property over time.
Many homeowners purchase a house not because it’s a great investment financially but because it allows them to invest in their future. Buying is cheaper than renting in the long run and provides the space needed to raise a family or create a home business. Additionally, in not paying rent anymore, steps can be taken towards retirement. As “empty-nesters” begin downsizing, they can take the money earned by selling their house to purchase a different property that may cost less. Then, taking the money left over, put it towards retirement.
Home values naturally appreciate on their own and typically appreciates about 3-5% per year without lifting a finger. However, the rate of appreciation can increase by renovating the house or making major repairs, such as giving it a new roof or updating the kitchen.
Unfortunately, not all renovations will increase your home’s value, so it’s best to do homework on this before beginning. Remember, you won’t get a dollar-for-dollar return on repairs or renovations, but some renovations can give you a higher return depending on the local market.
Real estate can also help supplement an income if you work a full-time job to save more money for retirement. Additionally, you can have recurring income even after retirement if you become a landlord or sell a house you’ve owned for many years to make a profit. There are many options that can be used to add to your income. Buying a house and renting it out is somewhat easy if you can get the loan and afford the down payment.
Additionally, you can purchase a multi-family property and rent it out while living in it so you can earn money towards your mortgage payment through rental payments while taking advantage of the living space you have available. The most common type of real estate investment is house flipping, which many people know about because of all the different television shows dedicated to it. House flipping allows you to purchase an undervalued home, fix it up, and sell it for a property in as little as a few months.
Real estate is a great investment option if you choose to invest in nothing else. However, it’s also a great way to diversify your portfolio to make your money work for you and earn more over time. Whatever you choose to do, buying a property is a great way to increase your net worth while providing you with peace of mind.
Diane Lott, Broker
Owner: Paradise Found Realty
Paradise Found Realty, Inc. of Palm City
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