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If you look at some of the most successful people in the country, almost all of them are invested in real estate. In fact, 90% of US millionaires have real estate as part of their investment portfolios. However, they don’t have everything in this market. Like every good investor, they have a plan and stay diversified. And you should do the same.
Here are five reason why you should invest in real estate.
#1: Diversification
True diversification isn’t what most people think. Did your portfolio go down in lockstep with the market earlier this year? If it did, you may not be properly diversified. Everyone needs assets that don’t go up and down with the stock market, and real estate could be one of those.
#2: Massive Tax Advantages
Real estate has more tax advantages than any other investment, but it will differ with each type. Not only can you get passive income that can be largely offset by passive losses, but you can also incur depreciation either up front or over time.
#3: Cash Flow
Historically, real estate goes up over time. So, you can get paid to wait. Depending on the type of real estate, you can get income over time. This may be in the form of rental income, which can come from any of the following properties:
- Single-family homes.
- Apartment complexes.
- Office and industrial complexes.
All of these real estate types can give you additional cash flow.
#4: Real Estate Can Be Recession Resistant and an Inflation Hedge
Everyone needs a place to live, so the real estate market can’t be disrupted. You can invest in affordable rental properties (such as single-family and multi-family homes). And if inflation returns (which is very possible), rents can go up. This could give you an inflation hedge, which can protect you in times of volatility. This is one of the reasons why real estate is a great diversifier.
#5: Control
Unlike the stock market (where you don’t have much control), real estate can give you a more level playing field. Depending on the type, you can have that control. You can force depreciation by raising rents or by improving the property. You can also decrease expenses through better management.
There’s a variety of ways to get started in real estate. You can start small or get a partner, and you an eventually invest in something big. For more information about how real estate can be a great addition to your investment portfolio, get in touch with Trevor Shakiba at Shakiba Capital.
