Real estate has long been considered a smart investment. When you buy a home or property, you’re able to grow your equity – and you can turn that piece of real estate into a profitable investment over time. Whether you’re buying homes as an investment or renting out a property to make some money, putting your money in real estate can be greatly beneficial.
Although real estate is a more complex investment than a traditional IRA or 401(k), it can be a fantastic financial choice.
Could real estate help increase your earnings, round out your investment portfolio, and be the key to growing your wealth? Here’s why so many people are choosing to invest in real estate today.
Real Estate is Less Volatile Than the Stock Market
The stock market is incredibly volatile. The stocks and funds you choose to invest in could fluctuate in value daily – and this could wipe out your investment completely.
However, real estate doesn’t suffer these unpredictable ups and downs. Real estate is actually a less volatile investment option. Unlike the stock market, where stocks are being traded daily, real estate minimizes your risk because you hold on to your investment property for a long time. And when the market improves, so does your investment.
Real estate also gives you more control over your investment. Investing in a piece of property lets you capitalize on multiple revenue streams, if you’d like.
Real Estate Value Increases Over Time
Any investment is expected to increase in value. The big question is how long it’ll take to increase – and whether or not you’ll be able to substantially grow your initial investment. However, when you invest in real estate, you can rest easy knowing your investment’s value will increase over the years.
According to history, real estate increases in value consistently – and the longer you hold on to a piece of property, the more money you’ll make. Like any investment, real estate can experience bubbles that bring home appreciation down. But, if you keep your property or home, you’ll see appreciation recover and values continue to climb.
Real Estate Will Diversify Your Portfolio
Investment experts and financial planners always warn people about the importance of a diversified portfolio. When your investments are diverse, you’ll spread out your risk and ensure you have the right mix of options to grow your money.
And real estate is a great way to diversify your investment portfolio. Real estate is said to have a low correlation with other major asset clauses – which means adding real estate to your portfolio will make your investments less risky. And you’ll have a higher likelihood of returns.
There Are Plenty of Real Estate Investment Opportunities
Many people worry that investing in real estate is too difficult. But, as many people are realizing today, it’s actually quite easy.
Investing in real estate is as easy as buying a home or piece of property. Once you’re a real estate owner, you can then decide how you’ll use your newest asset to make money. And there are plenty of options that can suit any investor, new or experienced.
The following are some of the best ways to turn a profit and make money off a real estate investment.
Invest in Properties to Flip
One of the most popular real estate investment options is flipping houses. Investors buy homes at an affordable price, often at auctions, renovate or update them, and resell those same homes later on at a profit.
Flipping houses is very common today, and if you make wise real estate purchases and budget your renovations well, you can make a sizable profit. The average gross profit made on house flips in 2017 was $66,448 – which is more than many people make in a year’s salary.
Invest in Properties to Rent
Another great real estate investment opportunity is buying properties and renting them out. Owning a rental property can build your wealth, and this kind of investment is low-risk. After you first purchase the property, renters will pay your mortgage through their monthly rent. And along the way, you’ll build your own equity.
After the mortgage is paid off, you’ll be able to pocket all of the money you net from renters. You can set a monthly rent, adjust that rent as needed or as the market changes, and generate income without doing much work. You will, however, need to make sure you keep the real estate rented out to make money.
Invest in Real Estate Investment Trusts
A lesser-known investment option is a real estate investment trust – or, as they’re commonly known, REITs. Instead of personally investing in individual properties, opting for a REIT lets you invest in a large-scale, income-producing real estate project.
If you put your money in a REIT, you’ll potentially invest in office buildings, shopping malls, hotels and resorts, apartment buildings, self-storage facilities, or even mortgage and loans for homeowners. Either way, the benefit of a REIT is that you can share the return on investment with others. And you won’t have to actually choose, buy, and manage these types of real estate yourself.
Is Real Estate Investing Right for You?
Real estate offers plenty of benefits for the average adult – and no matter your age, you can begin investing today. With the right plan for how to grow your money, you can increase your wealth and balance your financial portfolio.
And it’s easy to get started. Your first step should be determining how you want to invest in real estate? Are you looking to flip homes and sell properties to make a return on your investments? Or would you prefer to invest in a rental property and make a monthly income? Each option has different benefits, so make sure to research your choices. Research is the best way to determine which will be best for your finances, your age, and your abilities.