188: 11 Best Reasons Why Real Estate Investing is So Great

SHOW NOTES FOR EPISODE 188: 11 BEST REASONS WHY REAL ESTATE INVESTING IS SO GREAT

Why is everyone raving about real estate investing?  What’s so great about it?  How are average people becoming wealthy in such a short period of time with real estate investing?  In this episode, Bill takes a deep look at buy and hold real estate investing and shares his top 11 favorite reasons why real estate investing is the best investment option available.

When I was younger, working in the corporate world, or as an entrepreneur, I developed a love for investing.  I especially, loved researching stocks or other high-yield investments to see where I could get the best return for my dollar.  It was a thrill taking the risk, especially if it turned out in my favor.  Sometimes, it was like rolling the dice on a crap table, hoping for favorable return.  Other times, I thought, gee, I did my research and this has a high probability of giving me a good to great return.

I would celebrate when I’d see my investments double, triple or quadruple in value in a short period of time.  I’d just get quiet when there was no return or I took a big loss.  But, overall and over many years, my investment portfolio grew.

As I got older, my perspective changed.  I looked at my investment portfolio differently.  This is what I have to live on for the rest of my life.  I was looking at retirement square in the face, and I not only have to make these funds last, but if they are going to carry me through, until the final days, I’m also going to need to grow these funds because I doubt they will get me through AND allow me to enjoy my retirement years.  Instead of looking for the next “big win,” I was looking at stability, longevity and return.

There are lots of reasons people invest:

Here are the top ten reasons to invest your money:

• Grow Your Money. Investing your money can allow you to grow it. …
• Save for Retirement. …
• Earn Higher Returns. …
• Reach Financial Goals. …
• Build on Pre-Tax Dollars. …
• Qualify for Employer-Matching Programs. …
• Start and Expand a Business. …
• Support Others.

When people are considering where to invest their hard-earned dollars, especially if the funds were accumulated over many years, perhaps in a company 401-K or pension or a personal IRA, where the funds have become that precious golden “nest egg” that is expected to carry us all the way through our retirement years.  For us old dawg’s, we cannot afford to risk that money on something that may not give us a return or, worse yet, where we lose money.

When I came to the conclusion that real estate investing would be the vehicle to help me achieve my goals of stability, longevity and return, it did not come easily.

I looked at the global economic recession of 2008, where real estate investments turned south because of the housing bubble and subprime mortgages. In the aftermath of the recession, there was much negative sentiment over the real estate sector and few were inclined to consider investments into the sector, in a positive sense.  But, what’s interesting is that those who toughed it out and held on to their real estate or, who were totally brilliant and bought massive amounts of properties during the downturn, they faired very well.  And it’s for some very good reasons.  Real estate is tangible, resilient, will always ultimately go up in value and, because people always need a “roof over their heads,” if will always be in demand.

When I really thought about it, the overwhelming number of reasons why real estate investing is the best type of investing out there, blew me away.  I could write a very long list of the investment advantages but, in today’s podcast, I decided to just limit my list to eleven.  Here it goes:

1. Positive Cash Flow

If you’re interested in an income producing investment, real estate in your best investment strategy.  One of the greatest perks of real estate investing is its ability to generate consistent, positive cash flow and steady passive income.  And that’s just if you buy rental properties.  There are multiple ways, other than rental properties in which you can make a profit in real estate. These include buying property at a low price, selling it at a higher price, flipping, wholesaling, AirBNB rentals, the ability to build equity, among many others.

2. It’s safe (as houses)

There’s a reason why ‘safe as houses’ is a well-known phrase:  it’s true.  According to research by AMP, Australian property has increased in value at a rate comparable to that of the share market since 1926 – an average of 11.4% per annum – despite a succession of wars, disasters, recessions and crises. It’s done so without the volatility of the share market, too (more on this later), making it an all-round safer investment.   When you factor in the return and risk associated with buying property vs. buying stocks, property wins hands down.  Stocks may, at times, have [marginally] higher capital growth, but the difference in risk is huge. The risk is measured in variation in returns and capital growth (or loss) on shares can range from +40% in a year to -40% in a week!  You don’t get that sort of variation in property, which is another reason it is considered a safer investment.”

3. It’s easy to get started

You don’t need a special degree, certificate or license to start investing in property: in fact, many  investors didn’t start off intending to make their fortune through property.  Instead, they just bought a house to live in.  It’s only after seeing the value of their home increase – and realizing how much wealth you can generate – that many investors took the leap and start proactively investing.

4. It’s easier to research than stocks and bonds

Playing the stock market requires a lot of education. You have to understand how the system works, understand the complexity of the world of trading (not least of all all the different kinds of financial instruments used), as well as research brokers and fund managers.  Once you’ve done this, you’ve then got to get evaluate multiple prospectuses to better understand the companies on the market – which also involves digging into the financial press, annual reports, other company releases and so on.

Investing in property, meanwhile, is much simpler.  At its most basic, you can simply jump online and start looking at properties.  Admittedly, there’s more to real estate investing right than just picking a property, but a significant amount of research can be done online (and is usually either free or inexpensive) or by visiting potential investment markets, open houses and auctions – without having to garner realms of specialist knowledge beforehand.

5. It’s an asset you can use

Investment or not, your property is still just that – a property.  So, should events take a major turn for the worse, you can always move into that property, you can (pending rental agreements, of course) whether for the short term or the long term – and, if things change again, you can move back out, leaving your investment intact.  You can’t do that will a stock certificate or bar of gold.   It’s funny, when I buy properties, I still always ask myself, if things got really bad, would I be willing to move into this place and live here with my family?

6. Appreciation

This is what many cash flow investors call it “the icing on the cake.  I don’t always buy for appreciation but I always hedge my bet by looking for under-priced, under-valued properties every time.  This is another reason why real estate is the best investment strategy is the fact that you can invest for cash flow in the short run, but will yield appreciation in the long run, or both.  Of course, your decision should depend on your investment plans, but here is why you may consider investing for appreciation.

Real estate property prices are increasing annually. The change in demographics in the US, supply shortages, and scarcity of land are all reasons why prices are on the rise.  Today’s properties are guaranteed to go up in value in the next 10–20 years.  So if you are investing with the purpose of realizing your gains in the long term, real estate investing is the best investment strategy for you.  However, I always buy for cash flow first!

7. Hedge Against Inflation

This is one of the top reasons why real estate is the best investment strategy. Property prices and rents tend to go hand in hand with inflation forces.  So, when inflation occurs, it is justified for you to increase the rent as a result. Other investments such as stocks don’t particularly ‘enjoy’ this perk that comes with real estate investing.

8. Reducing Taxes

Real estate investing comes with numerous tax benefits, especially with the latest tax bill reforms.  You can get tax deductions on mortgage interest, cash flow from investment properties, operating expenses and costs, property taxes, insurance, and depreciation (even if the property gains value).  Make sure to always record everything from the costs of maintenance, to utilities, rental repairs, and insurance, on your rental property to help reduce your taxes.

9. You Have More Control

When you invest in real estate, you essentially become your own boss.  It’s a business.  And as such, you become the maker of the decisions whether it’s deciding on who your tenants are, to how much to charge for rent, or when to buy and sell. Your role in the decision making process is a major reason why real estate is a less risky investment.  Because of this, it’s much easier to control and regulate the value of your property and the size of your return – especially as you get into multifamily investing and “forced appreciation.”

Of course, there are always external factors that affect real estate, but at the end of the day, you call the shots, and you become liable for the choices you make.  So, if you’re the type of person who likes to be in charge, and who likes to have control over your business, real estate may be the best investment strategy for you.

10. Leverage

If you buy an investment property using a bank loan, you will enjoy a high degree of leverage.  Let’s assume your property costs $200,000, and you put in a down payment of 25%.  That means that you’ve paid $50,000 in cash, and asked the bank to finance the rest.  What’s great about real estate investing is that the minute you own the property, you are free to rent, sell, flip, etc.  So if you rent out the property, the income you receive will help you pay the rest of your mortgage.  If you sell the property at let’s say $250,000, you’ll be making 100% return in profits.

You can also invest in multiple properties at a time, enjoy the leverage, and increase your overall net income and net wealth!

11. It’s a Great Retirement Plan

Real estate is one of the best retirement plans out there whether you’re looking for an early or regular retirement plan.  Investing in rental properties will help you generate regular, steady, passive income for your golden years so you can  spend more time doing things you love like travel, enjoying a favorite hobby, visiting family, spending time with your grand kids, doing volunteer work or just enjoy your retirement years at a level you choose!  And one of the most amazing benefits of real estate investing is that, even when you are gone, it can benefit those you love – as a legacy you leave behind for their futures!

If planned and conducted successfully, a real estate investment plan can secure your entire retirement.  Of course, you’ll need to be systematic and knowledgeable in order to make the best investments. But even if you don’t it’s difficult not to make money with real estate investing.

In Conclusion

As you can see, real estate investing comes with numerous advantages and perks. But you must know that it’s not always easy and simple. There is hard work involved to get educated and make the right investments.  You’re going to have to research, plan, ask around, and be well knowledgeable in the real estate world. But be sure of one thing, real estate definitely is still and will always will be the best investment strategy!

This Episode Brought to You by Roofstock

This episode of the “Old Dawg’s REI Podcast” is sponsored by Roofstock, the first online marketplace created exclusively for investing in single-family rental homes with tenants already in place so you can start earning passive income right away.

Roofstock has put together a SPECIAL OFFER just for Old Dawg listeners who use the link Roofstock.com/dawg.   If you  sign-up today, you’ll save $350 when you close on your first rental property through Roofstock.  Offer valid for a limited time only.  Terms and conditions apply.

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