We understand that inflation in the USA continues to increase. The dollar bill is losing its value, and currently the interest rates are high. You are working hard for what you earned, and you want to invest it in something that is going to return on that investment. So is real estate a good option for your investment?
The simple answer is a resounding yes! With its proven track record of delivering strong returns, diversification benefits, and tangible asset value, real estate has long been favored by investors seeking to build and preserve their wealth over time. There are so many reasons why real estate is a smart and lucrative investment choice, due to it’s unique advantages, wealth-building potential, and strategies for success.
Historical Performance + Stability
One of the most compelling reasons to invest in real estate is its historical performance and stability as an asset class. Unlike stocks, which can be subject to market fluctuations, real estate has demonstrated resilience and long-term growth potential over time. Historical data shows that real estate values tend to appreciate steadily over the years, providing investors with a reliable source of wealth accumulation and capital appreciation.
But not all areas are equal. Talk to your real estate agent about the area you are looking to purchase in, does it have a history of appreciating quickly? Nearly all real estate will increase in value over time, but some will increase much faster. Whether you are going to live in the house or rent it out, you want to look in areas that appreciate quickly.
A lot of people still remember the housing crash of 2008 and this may scare them away from buying real estate, thinking other investments are stronger. However this period of time had some unique characteristics and was the only time that real estate dropped in value like it did then – making this event an outlier in history. Other investments like the stock market have had many severe drops in value over the years.
A Tangible Asset
Another key advantage of real estate investment is the tangible nature of the asset and its ability to serve as a hedge against inflation. Unlike paper assets such as stocks or bonds, which can be subject to fluctuations in market sentiment and economic conditions, real estate provides investors with a physical asset that retains inherent value over time.
Land and property holdings can be leveraged to generate rental income, capital gains, and tax advantages, offering a steady stream of cash flow and wealth accumulation potential. Plus, real estate assets have historically outpaced the rate of inflation, providing investors with a reliable hedge against rising prices and preserving the purchasing power of their investment capital. And that doesn’t even include the profitable short-term rentals that many investors are doing through Airbnb. We’ve personally always been grateful for the investments we’ve made into real estate and the income that we’ve gained through our Airbnbs.
Passive Cash Flow
Let’s talk about the rentals a bit more. One of the most attractive features of real estate investment is its ability to generate passive income and cash flow through rental properties and other income-producing assets. Real estate investments offer the potential for ongoing rental income that can supplement other sources of income and provide financial stability. Rental properties can be leased to tenants, generating monthly rental payments that can be used to cover mortgage expenses, property maintenance costs, and other operating expenses. Over time, rental income can provide investors with a reliable source of passive cash flow and wealth accumulation, allowing them to build long-term financial security and achieve their investment goals.
As you know, one of our favorite ways to have passive income is through our Airbnb. Airbnb may not be as steady as a long-term rental, however short-term guests will often take better care of your property. You’ll also have more opportunities to keep an eye on your home because you can check in on it between guests. You may need to pay out of pocket more to keep everything working properly, but that is usually quickly overcome by the large amount of cash flow through Airbnb.
Tax Advantages
Real estate offers a variety of tax advantages and wealth preservation strategies that can help investors maximize their returns and minimize their tax liabilities. Rental income generated from investment properties is typically subject to favorable tax treatment, with investors able to deduct expenses such as mortgage interest, property taxes, maintenance costs, and depreciation allowances from their taxable income. Not only that, real estate investments offer opportunities for tax-deferred exchanges, capital gains tax exemptions, and other tax-efficient strategies that can help investors preserve wealth and optimize their after-tax returns. By leveraging the tax advantages of real estate investment, investors can enhance their overall investment performance and build wealth more effectively over time.
Chris Beiler and Lance Fisher are our two in house real estate agents and they would love to chat about all this and more whenever you are ready.
CONCLUSION
In conclusion, real estate investments offer a multitude of benefits and advantages that make it an attractive and lucrative investment opportunity for people seeking to build and preserve wealth over time. With its historical performance, stability, and long-term growth potential, real estate provides investors with a reliable source of income, capital appreciation, and portfolio diversification. Not only that, real estate offers unique tax advantages, leverage opportunities, and inflation hedging benefits that can help investors maximize their returns and achieve their financial goals. Looking to invest? We can help you. Contact us and let us know what you are looking for!
