Your future self will thank you. You’ve probably heard this time and again, but it’s true – if you don’t have savings set aside to cover unexpected expenses or if you don’t invest in long-term investments like real estate, you might find yourself struggling to stay afloat when life deals you an unfortunate hand of cards. With this in mind, here are five reasons why investing in real estate might be the best way to go about building your future financial security.
1) The return on investment
Investing in real estate is a good way to make more money. For example, when you buy a house and sell it a year later, your investment would have grown by 8 percent or $10,000. If you had put that money into an S&P 500 index fund with dividends reinvested over those 12 months, it would only be worth $200 more than when you started! However, there are some downsides to investing in real estate as well. In addition to being riskier than stocks, real estate has operating costs, like maintenance, that stock holdings don’t typically incur. Also, investors can get scammed if they choose their property managers poorly (and there’s always a trade-off between local management and far-away). Overall though, if you find a solid property manager who will handle upkeep while waiting for appreciation on your investment (or one who can help sell), then investing in real estate can be lucrative.
2) It’s a guaranteed asset
No matter what happens, your property will be worth something. This is a key distinction between real estate and stocks or bonds. Unlike other investments, it’s rare that you’ll get scammed or lose money on your investment (though it can happen). If a market drops, you won’t have to worry about losing capital.
3) The property market is always on the rise
no matter what’s happening, there are always properties that are being bought or sold. If you’re looking for a good investment opportunity, consider investing in real estate. It’s one of few sure-fire opportunities out there—as long as you know how to pick up a good deal! Here are 5 reasons why you should invest in real estate
4) Property is an easy way to diversify your portfolio
This is a smart move that can add stability to your retirement portfolio. Owning rental property means you have to balance your desire for passive income with management responsibilities, which can be time-consuming. But if you go into it knowing what you’re getting into, and if you build a solid team to help manage it all, investing in real estate can pay off big time over time.
5) Property allows you to leverage your time and skills
It doesn’t take as much time or skill to manage a property as it does to start and run a small business. And, after you buy a property, you don’t have to worry about marketing yourself or your services because tenants will find your house on their own (and pay you to rent while they do it). Plus, if you invest strategically—in an up-and-coming neighborhood, for example—you can often get tenants through word of mouth. And that means more money in your pocket without having to lift a finger.
Many people underestimate how lucrative real estate investing can be: Even with minimum wage earners working part-time jobs (40 hours per week), many investors are able to make six figures per year; others make millions.