15 Factors That Make Real Estate the Optimal Investment Choice

Real estate investing may seem like a significant undertaking, yet it can be one of the wisest moves you ever make.

Your capital can be invested in many ways to grow your net worth and save for the future. Here are 15 reasons why real estate should be your top investment priority.

1. It Is Tangible
Investing money can be daunting for investors, especially when the investments they’re placing don’t offer any physical signs that it has any value – such as stocks or cryptocurrency investments. By contrast, real estate gives you tangible assets you can see, feel and even control directly.

Investors gain more peace of mind knowing they can renovate, repair or sell an asset while remaining in control of it.

Selling stocks, for instance, leaves you powerless over their value as the market dictates their cost and current demand. In contrast, real estate markets provide you with more control to increase its worth for greater capital gains.

2. Real Estate Provides Cash Flow Making investments is an exciting adventure, but when your cash doesn’t start flowing back until the asset has been sold off it can be disconcerting and lead to your wanting to do something drastic with it just so you can see some return of investment. Real estate investments offer cash flow opportunities which may relieve frustration or lead you to sell just so that your money will come pouring back out again.

Real estate can provide cash flow when used as rental properties; monthly rent and any profits gained from selling can provide regular cash payments to the owner.

While you must account for potential vacancies and problem renters, your cash flow should likely remain more steady compared to investing in stocks or ETFs.

3. Real Estate Is an Effective Buffer against Inflation
Inflation reduces the purchasing power of dollars. As prices for various goods and services increase, so too do property values and rental costs increase accordingly.

As an owner of rental properties, you may be able to charge higher rents when lease renewal or new tenant sign up comes around and earn greater profits when selling them during inflationary times due to rising costs.

However, stocks tend to decrease during periods of inflation as companies face difficulty covering costs with higher prices; as consumer spending drops due to inflationary conditions, stock values generally decrease accordingly.

4. Real Estate Investors Can Claim Tax Deductions Real estate investors often qualify for tax deductions that other types of investors, like stock and bond traders, do not.

Depreciation (27.5 years for residential buildings and 39 for commercial ones), mortgage interest, repairs and maintenance expenses, property taxes and travel expenses are the most frequently deducted items.

Tax deductions depend on several factors, including location and ownership structure of your property. Always seek advice from a tax expert when filing taxes to take full advantage of real estate tax deductions.

5. Real Estate Investment Can Leverage Your Cash
Most investments allow only as much investment capital to be put in; but real estate allows you to leverage that investment with mortgage financing and extend it further than you originally planned.

For instance, if you wish to purchase a $200,000 home but only have $50,000 saved up, borrowing the rest might allow you to do just that without investing every last cent yourself. This way you could secure yourself an investment worth $240,000 without incurring interest expenses along the way.

Although stock investing offers margin investing opportunities, not everyone qualifies. Mortgage financing, on the other hand, has greater flexibility and accessibility and may be suitable for more investors.

6. Property Appreciation Is Likely
There are few guarantees in life when it comes to investing. No one can guarantee or assume that a company’s stock value will increase, or that they will remain profitable over time.

But you can count on property appreciation if you conduct thorough research and invest in areas where property values typically increase.

As noted above, you have some control over property appreciation; upgrading or renovating can stimulate it. Working with an established real estate agent will ensure you invest in areas with increasing values.

7. Real Estate Is Independent of the Stock Market
One of the key principles in investing is diversification – meaning you should spread your money across various investments like stocks. Real estate can offer increased chances for capital gains regardless of what may happen with regard to its performance on the market.

So if the stock market crashes, real estate may not necessarily follow suit and become an undue drain on your portfolio – helping ensure that even in challenging markets your portfolio won’t suffer completely.

Real Estate Vs Stocks: What 145 Years Of Returns Tell Us”

8. Passive Real Estate Investing
Real estate investments offer passive returns and can provide great opportunities. Here are a few ways real estate investing could benefit your portfolio:

Purchase rental properties and pay a property management company to manage them; or invest in real estate investment trusts (REITs), earning a share of profits while they purchase and manage properties.
Consider real estate crowdfunding – an alternative investment vehicle which provides access to group real estate investments while offering you some of the profits proportional to the size of your investment.
9. Cash Flow Is Predictable
When investing in the stock market, there is no way to predict how much money you’ll make. There is usually no cash flow unless investing in dividend stocks which do pay out dividends; even these investments cannot be predicted due to not knowing exactly how much profit will be earned or which companies will issue dividends in future years.

Real estate provides predictable cash flow because you are in control of how much rent to charge and any other monies collected. While capital gains can’t always be predicted exactly, you know exactly how much money will come in each month.

10. Equity Builds Over Time
No matter whether your property investment involves borrowing with a mortgage or paying cash outright, over time equity builds through reduced payments on both fronts. Also consider property appreciation which also contributes to building equity over time.

Equity represents the money you would gain if you sold the property now, increasing both your net worth and each year of ownership.

11. Real Estate Investors Have Many Options
Real estate investors have multiple investment options at their disposal when it comes to real estate investments, from passive opportunities like REITs and crowdfunding, to active real estate investments like:

Buy and rent out properties to tenants. Invest in commercial properties to rent to businesses. Tweak or fix up properties quickly for quick profits.
12. Real Estate Investments Are Secure Stock investing doesn’t offer much in terms of security; you are taking a chance on an unknown company and its stock value increasing over time – something real estate investments offer, while stocks could end up leaving you holding all the cards.

Real estate investing provides tangible assets with steady appreciation. Having real estate as an investment gives you peace of mind knowing you could quickly sell or hold onto it in case something arises that requires liquidating it or keep growing it further.

13. You Can Borrow Against Real Estate
Once your real estate investments build equity, they may qualify for loans against them to reduce property equity but simultaneously liquidate some of their investment without selling it outright. This option reduces property equity but offers the convenience of liquidating some portion of their investments without selling.

Liquidating your investment in stocks requires selling them; borrowing against them cannot continue appreciating like real estate does.

14. Real Estate Investments Can Benefit the Community
Even as you consider real estate as the ideal investment strategy for yourself, remember how beneficial real estate investments can be to the greater community as well.

By purchasing, renovating, and maintaining property you help increase its property values in an area. Furthermore, providing families with another viable residence helps strengthen communities across the board.

15. Real Estate Investing Is an Active Process
Stock market investing doesn’t come with special tax deductions or treatment, while real estate investing can become a business you actively participate in, building your portfolio while supporting yourself and your family financially.

Conclusion These 15 reasons that real estate is the best investment provide sufficient motivation for diversifying your capital by investing in real estate.

No matter if it’s your first investment property or expanding an existing portfolio, real estate investment offers many advantages that will give you access to equity, cash flow and an asset that provides control.