When most people choose to start investing, they immediately look for opportunities in the stock market. While plenty of investors successfully turn a profit by investing in stocks, it’s worth it to consider your other options—namely, real estate investment.
Real estate investing is an option for both active and passive investors and there are numerous ways to get involved in the industry. Here are 7 reasons to park your wealth in property, instead of chasing the next up-and-coming stock:
One of the primary benefits investors gain when they choose to invest capital in real estate is an increased sense of control over their portfolio. You get to make all of the decisions related to your investment, from which area you want to buy property in to how you want to develop, renovate or lease it. In many cases, real estate markets are easier to predict and more likely to yield a return than stocks are, so investors can maintain a sense of control over their investment. You’re also able to make decisions on the fly, without the constraints and limitations of buying or selling stocks.
There are a wide variety of different ways you can get started investing in real estate. From buying a home to flip, to purchasing a large office building to lease out, you can choose an investment option that aligns with your preferences ad investment goals. You can also decide how involved you want to be in the management of your portfolio. Some investors choose to manage their property as an on-site landlord, while others outsource the management of their properties and enjoy the passive source of income. Regardless of your preferences, you can find a real estate investment option that suits you.
Investors can physically manage their investment in real estate. Investing in stocks requires you to put your faith and trust into something that you can’t see or feel; real estate is secured by something tangible. For many investors, this tangibility helps them feel more confident in their investment. You can personally select, inspect, monitor and manage your property, so you’re always involved and informed.
It’s challenging and often impossible to effectively leverage debt to invest in the stock market, not to mention the risk involved. With real estate investment, it’s easy to maximize your debt to create the best return possible. Most investors are already familiar with the process of financing real estate investments thanks to experience with home mortgages, so it’s often a straightforward transition into financing for investment opportunities.
Inflation is always a concern among investors, but real estate offers a reliable hedge against it. Because real estate is a tangible asset, you benefit from appreciation for the duration of your investment. Unlike when you invest in the stock market, you don’t have to worry about decreased purchasing power when you invest in real estate.
Regular cash flow:
While lots of stock market investors achieve great profitability, all of their gains are lost in the event of a downturn or sudden value loss in their investment portfolio. When you own real estate, you maintain your equity and continue receiving regular cash flow no matter what happens in the stock market. If you have a rental property, you can count on regular, scheduled payments from your renters, even if the market takes a downward turn. While the real estate market is subject to declines at various times in different markets across the country, you don’t have to worry about the kind of instant loss that’s associated with a stock market downturn.
The cash flow real estate offers enables investors to reinvest their money into more real estate opportunities. Investors can cultivate an incredibly diverse portfolio of real estate investments, hedge themselves against inflation and enjoy a passive source of income—all without investing any capital into the stock market. While a lot of investors choose to include both real estate and stocks in their investment portfolio, the real estate market is often the best transition into investing for beginners. As long as you effectively manage and leverage your debt and equity, you can cultivate an impressive portfolio and continue growing value in your investments.
Regardless of how experienced you are as an investor, it’s important to carefully weigh all of your investment options before you decide about where to put your capital. Investing in real estate is a great option for individuals who are looking for a tangible asset with reliable cash flow. Real estate investments can be selected to meet your specific needs, goals and preferences perfectly, so you can achieve your vision for your portfolio and generate profit.