Founder | CEO at Sterling Rhino Capital, we help people retire early through multifamily real estate investing.
Real estate investments are often a great way to earn higher-than-average returns while also diversifying your portfolio. Some suggest real estate investing, when done appropriately, is the highest-earning asset class a portfolio can have. Let’s look at some of the reasons to investigate real estate investing as an opportunity to grow capital.
1. It’s one of the safest investments you can make.
Real estate investing is safe and secured by the asset itself — the building. Rarely will you see your investment lose value and if so, it’s usually only for a short period of time. Unlike fiat currencies like the dollar, real estate doesn’t lose value to inflation year after year — it performs better. Smart investors can even set themselves up well in down markets by buying value-add assets such as many did after the housing bubble burst in 2008.
2. There are multiple ways of investing in real estate.
In today’s digital-savvy world, it has never been easier to invest in real estate. With syndication groups introducing new and innovative ways to invest in all kinds of property, such as multifamily apartments and the likes, you’ll have plenty of options to choose from in this investment class.
3. There are several ways this asset class appreciates in value.
With real estate investing, your asset not only appreciates naturally with the market, but you can also force appreciation. Think of it like this: Natural appreciation occurs over time as the general market for real estate inflates. Forced appreciation is the revenue that can be made from the money you put in. New windows? That’ll bring in value. Just got the roof re-done or renovated some interiors? That raises your selling price, too. The reason for this is as you renovate, you can increase the rents and the increase in rents forces the value up. There are many things you can do to force the appreciation of your property and this can make real estate investing a real cash cow.
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4. It can diversify your portfolio.
Many people never invest, and the ones who do rarely venture from the stock market. Perhaps this goes without saying, but the most successful investor is always the most diversified, as well. It doesn’t matter if you are an accredited or non-accredited investor, you can still invest in this asset class. It’s no coincidence that those who diversify have the most chances at success long-term.
5. Real estate investors generally pay fewer taxes.
The government loves real estate investors. Why? Because they develop society by developing land for the public. Because of this, they tend to look favorably toward real estate investors come tax season.
Here are a few of the breaks you can expect:
• Property tax deductions
• Travel costs associated with your investment
• Cost of repairs and maintenance
• Depreciation deduction/Cost segregation study
• Legal and management services deductions
6. You can get easy access to loans.
Banks are nice to real estate investors, too. As long as you have reliable credit, a consistent job, some experience or a qualified sponsor, you can expect to get a loan from the bank, often at a reasonable interest rate. Depending on interest rates at the time of purchase, you may also have several options when choosing the length of your mortgage.
7. It can be passed down through generations.
Real estate is a tangible investment. It is one of the easiest asset forms to pass down from generation to generation. Many people like the fact that they can leave their property in their will for their children and, in some cases, defer some of the taxes.
8. You can earn passive income.
This is one of the best reasons to invest in real estate: passive income. That’s right, there are dozens of ways you can turn a real estate investment into passive income while a property manager or sponsor does the heavy lifting. Whether you are the sole owner or you are a part of a syndication group, passive income is normally the goal of any true real estate investor.
Real estate investing is one of the best-performing asset classes out there. Year after year, it yields some of the highest returns in any portfolio. Do it right, and you could end up retiring well before you ever considered possible.