07/07/2023
βοΈReasons why real estate is a smart investment:
1. Positive cash flow.
You get a regular income stream through real estate investments, and oftentimes, your yield is higher than what you would make from stock dividends.
2. Hedge on inflation.
Real estate investments have shown the highest correlation to inflation relative to other assets such as corporate bonds and Treasury notes. When inflation occurs, the price of real estate will also rise.
3. Multiply asset value.
A benefit of investing in real estate, including commercial properties, is that you can place debt on your asset. That way you can acquire more assets without necessarily having to put up the cash to pay for them.
4. Capitalize on physical assets.
When you purchase rental properties, you are investing in something with meaningful value. The land where the property is built on has value, as does the building itself.
5. Tax Benefits.
Real estate owners get unlimited mortgage interest deductions that protect a portion of the cash flow generated and paid to investors.
6. Appreciation of asset value.
Over time, inflation will continue to increase, thereby reducing the value of the dollar. But with income-producing real estate, the value of your asset also increases while the income derived from your property (from rentals) also goes up.
Finally, owning a beautiful piece of property is always a source of pride for anyone. When you have a property in a great location, youβre certain that it will make money for you, regardless of whether you rent it out or live in it and re-sell sometime in the future.
Weβve seen a lot of people make costly mistakes buying things like a sports car or a boat. They brag about it until eventually they realize how expensive it is to maintain their βinvestmentβ and when they try to sell it, they canβt even get back the amount they paid for it. But with real estate, the value of your property will continue to grow over the years.
