There is no denying that real estate is one of the most reliable and lucrative methods for creating wealth. Over the years, numerous investors have accumulated
massive amounts of income from real estate assets. Compared to other types of securities that are often volatile, real estate is appealing because of the safety, intimacy and profitability that accompany each investment.
History has proven that investors choosing to allocate their capital in real estate turn out wealthier than those invested in any other form of security. With the current global population estimated at roughly 7 billion, we have witnessed an influx in the demand for property coinciding with the expansion of our civilization. As human beings, our innate need for shelter has transformed into the mass development of housing structures worldwide. Beyond relying on our houses as a physical amenity, we place a monetary value on our homes that in most cases is our largest financial asset. This is precisely why investors covet assets in the real estate market.
The feeling of intimacy stems from your personal ability to value your house as a tangible asset. In comparison to holding stock in publicly traded companies, your house and your decision of what to do with your house (sell, renovate, rent) is completely under your control. Have you ever heard the term in real estate that you are, “making money in your sleep”? That is because the value of your property will increase as time passes you by. Often the factors conducive to this appreciation are expansion of the neighborhood, improvement to the home, and rental increases in the area.
This type of investment is also tempting because of the power of leveraging. With a down payment accounting for only a small fraction of the total asset, you have the ability to generate yields exponentially larger than your initial investment. Your investment is also taxed more favorably than other investments and a way to ensure more of your income. Aside from capital appreciation, by choosing to house tenants you guarantee yourself stable monthly revenue in the form of rent payments. In theory, this continuous cash flow can be used to pay off your mortgage as you let the value of your property increase.
Due to the safety and long term accruement of profits, investors purchase real estate with their futures in mind. Real estate assets are one of the most commonly
recommended securities for investors looking to save for their retirement. For the more present minded, refinancing through the purchase of additional properties is also a frequent choice. With such variance in prices in the real estate market, investors can begin by pursuing a venture at a price level that makes them feel comfortable. And often the case, they choose to purchase additional units as their confidence grows. The bottom line is that they choose real estate because of the reliable cash flows, proven tax deferral, and enticing long term capital appreciation.
