In life, there aren’t many things better than certainty. While certainty can be hard to come by — when you invest in real estate— you can be sure of many things. You can be confident that it represents true diversification, away from the volatile stock market. You can be sure that this type of investment is both tangible and likely to appreciate over time. You can feel secure knowing that your investment creates cash flow over time for you pay off your mortgage. Most importantly, you can rest assured that real estate is a solid long-term investment option.
In fact, according to a Gallup Poll, 35% of Americans agree that real estate is the best long-term investment – with good reason.
Consider the following:
Investing in real estate enables you to diversify your portfolio away from the stock market. Diversification means allocating capital in a way that reduces the exposure of any one particular asset to risk. You achieve this by investing in multiple asset classes like stocks, bonds, commodities, and real estate.
Historically, single-family rental returns have correlated negatively to the S&P 500, where when the value of stocks and other traditional assets declined, the value of real estate investments actually increased.
Real Estate is a tangible asset. You can see it, touch it, and most importantly, earn money from it, quickly (this goes back to the degree of certainty mentioned earlier). Intangible assets, on the other hand mainly include investments such as bonds and stocks, and come with less certainty because their values move along with the daily fluctuations of the market. Tangible assets, on the other hand, technically come with a greater degree of certainty. With real estate, you are more likely to know the actual value of your investment and many times it is in your hands, in the form of rent.
Cash Flow Generation
As mentioned above, one effect of tangibility is cash-flow. Real estate investments can generate it for you— consistently. Owning a rental property, for instance, makes cash flow available to you from tenants paying rent. This can help pay off your mortgage. If your mortgage is already paid off, even better— it goes directly into your pocket. What’s even better is that market rents are increasing. Out of 15 major U.S. cities analyzed by SmartAsset, 12 saw average rental rates rise between 2015 and 2016. In fact, rates are rising fastest in the Southwest—in L.A., Dallas, and Phoenix especially. Rising rental rates is a good sign for investors, as it means more rental income for you now and in the future.
With a healthy, robust housing market and even more growth forecasted, now is a great time to invest in real estate. If you’re unsure of the first steps, we can help. Sign up for a free consultation today and we’ll map out a plan specific to your goals. Do it for your future. Do it for your families’ future. Do it because in our unpredictable world, we could all use a little more certainty.