By James HarrisReal estate is a great investment for many reasons. You can enjoy an excellent rate of returns, amazing tax advantages, and leverage real estate to build your wealth. Here are the top five reasons why real estate is a great investment.
Real Estate Provides Better Returns Than the Stock Market Without as Much VolatilityHistorically in real estate, your risk of loss is minimized by the length of time you hold on to your property. When the market improves, so does the value of your home, and as a result, you build equity. The risk never changes in the stock market and there are numerous factors beyond your control that can negatively impact your investment.
Real Estate Has a High Tangible Asset ValueThere will always be value in your land, and value in your home. Other investments can leave you with little to no tangible asset value such as a stock which can dip to zero, or a new car which decreases in value over time. Home owners insurance will protect your investment in real estate, so be sure to get the best policy available so your asset is protected in the worst-case scenario.
Real Estate Values Will Always Increase Over TimeHistory continues to prove that the longer you hold onto your real estate, the more money you will make. The housing market has always recovered from past bubbles that caused home appreciation to slip, and for those who held on to their investments during those uncertain times, prices have returned to normal, and appreciation is back on track.
Now, real estate investors in the top performing markets are enjoying a windfall. In fact, this past year, every state in the nation had a positive appreciation, and some of my clients in the Los Angeles market have made millions of dollars in less than a year from flipping.
An Investment in Real Estate Can Also Diversify Your PortfolioIf you've ever spoken to a financial planner about investing, then you are very aware of the importance of diversification. When you diversify your portfolio, you spread out the risk. Real estate will always serve as a safe tangible asset to mitigate the risk in your portfolio. Many have amassed wealth by solely investing in real estate.
Last but Not Least, Real Estate Investing Comes with Numerous Tax BenefitsYou can get tax deductions on mortgage interest, cash flow from investment properties, operating expenses and costs, property taxes, insurance, and depreciation (even if the property gains value) and other benefits.
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