Did you know that real estate can be its own form of investment, like stocks and bonds? This means that, if you play it right, the real estate decisions you make can help you build significant wealth over time comparable to investing in the stock market.
For instance, if you decide to own a home, its equity could build over time and result in great profit compared to if you had rented the same home for the same time period. Selling a home for more than you paid or renting out your property are also ways to build wealth.
Here are aspects of real estate investment that may contribute to your decision to invest:
Like stocks, your rates of return depend on the state of the economy. If the real estate market is doing well and business is booming, you will gain more than if the market was doing poorly and property values were decreasing.
As a result of its dependence on the current economy, real estate investment is a riskier form of investment. This means that, as you would a stock portfolio, you will want to plan your investment over a long time period, so your profits can come back from fluctuations in the market.
A unique aspect of real estate is that you can borrow up to 80% of what you pay for the property. You can make money by using what you borrow to increase returns. Learn more about leverage here.
The government takes kindly to real estate growth and may return the favor. Deductions, exclusions, and deferrals are available for what you gain. Who knows? You might get a handsome sum.
With population growth and land scarcity, property values increase over time. Zoning restrictions imposed by the local government that segregate the uses of certain properties may give you an advantage if you develop your property strategically. Check out this information on zoning here.
This form of investment is practical in that it is the only one that you can live in!
Like other forms of investment, real estate has its pros and cons. It is important to conduct in-depth research in order to plan increasing your wealth over time rather than decreasing it. And make sure you understand the effort it will take to maintain the home’s value. You don’t want to make such a large investment in both wealth and energy without it paying off in the end.
If you decide to invest in real estate, do research on REITs or real estate investment trusts. REITs are real estate investment companies that purchase real estate for you. Find out more about REITs here
We hope this article has helped you make a decision on whether to invest in real estate! Want to learn more from someone on Our Team? Feel free to Contact Us. We're happy to help.