366: Is Real Estate Still a Good Investment in 2020?

SHOW NOTES FOR EPISODE 366: IS REAL ESTATE STILL A GOOD INVESTMENT FOR 2020?

With 2020 fast approaching, people are evaluating the best ways to invest money in the new year.  There are plenty of investment options but which one will give the best return considering the economy, elections, interest rates and other unknown variables.   Is real estate, which has done so well over the last five years, still poised to produce good returns in 2020?   In today’s podcast, Bill looks at real estate specifically and how it’s likely to perform in the new year.

With 2020 fast approaching, you must be thinking about the best ways to invest money in the new year.  There are plenty of investment strategies in the US, including residential real estate properties, so which one should you go for? Indeed, in 2020 real estate is not only a good investment but actually one of the best things to invest in. Wondering why? Listen on to this podcast to figure out what reasons make real estate investing a top choice among the numerous ways to invest money.

5 Reasons Why Real Estate Is a Good Investment ALWAYS

Before we dive into the specific US housing market predictions for 2020 which make real estate stand out among other investment options, let’s have a quick look at the general advantages of this strategy. Taking all these factors into consideration, the answer to the question “Is real estate a good investment in general?” is YES YES YES.

1. Good Investments Are Low Risk

While any investment holds a certain degree of risk, the best investments to make money tend to be relatively low risk, at least relative to the rate of return that they offer. This is exactly the case with investing in rental properties. As real estate properties are tangible assets, it is virtually impossible to just lose everything as a property investor, while the same cannot be said about stock investments. Even if the overall US housing market or the local real estate market goes through a recession, it is bound to come back. People will always need a place to live, no matter what, so real estate demand is guaranteed to be there. The fact that real estate is a low risk strategy makes it a good investment at any time.

2. The Best Investments Provide a Hedge Against Inflation

The reason why so many people in the US and elsewhere wonder where to invest their money is to protect it against inflation, otherwise, they would keep it in the bank where it’s quite safe. Investing in real estate, actually, is a hedge against inflation. The value of properties in any real estate market rises over time, and this is known as natural appreciation. The main driver behind this phenomenon is the fact that the land on which real estate properties are built is a limited resource, coupled with the ever-increasing population which puts more and more pressure on the demand for housing. Indeed, the average annual rate of real estate appreciation has exceeded the average annual inflation rate in the US housing market in the past decade, and this trend is expected to continue into 2020 and beyond.

3. Investing for Income Is Important

The best way to invest should provide investors with money not only in the long term but also in the short term. Rental real estate properties allow a real estate investor to start making money right away. Once he/she is done buying a rental property, this property can be rented out immediately to start generating monthly rental income and return on investment. That’s why investment properties are frequently referred to as income properties. With the real estate investment strategy, you don’t have to wait for years for your assets to appreciate and capitalize. Moreover, you can choose how to make money in real estate for the maximum return: with a traditional rental property or an Airbnb investment property.

4. Making Money in the Long Term Is Also Important

Wondering where to invest money to get good returns in the long run? The answer is REAL ESTATE once again. As mentioned above, real estate appreciation happens naturally, without any efforts on behalf of the investor. This means that with residential investment properties you can make a lot of money passively once you decide to sell your house. Now, if that’s not a good investment, what is?!

5. Real Estate Investing for Beginners Is a Viable Option

Many of the best investments are difficult to get started in as they require extensive knowledge and understanding of the market. Moreover, many of them necessitate full-time devotion in order to generate the best return on investment. This is definitely not true about real estate. First of all, you don’t need any specific degree if you are thinking about how become a real estate investor. All the knowledge and real estate data that you need is available online. A good resource to begin with is Mashvisor’s blog where you will find thousands of articles ranging from how to get started in real estate to the best places to invest in real estate in 2020. Second, buying rental property with good cap rate and cash on cash return does not involve detailed expertise or manual real estate market analysis and investment property analysis anymore. In 2020, the best real estate investment tools allow investors to find a profitable income property for sale in a matter of minutes. Third, to invest in real estate, you don’t need to leave your 9-to-5 job. With the help of software tools and professional property management, you can make passive real estate investments on a part-time basis.

So, you can see why real estate investing is good in general. But how about in 2020? Will this be the case again?

4 Reasons Why Real Estate Property Investments Are Good for 2020

To figure out the answer to the question “Is real estate a good investment in 2020?”, we need to consider the US housing market trends expected for next year. Here are the most important factors which both experienced and beginner real estate investors should keep in mind in 2020:

Is real estate a good investment in the coming year?

Real Estate Prices Will Continue Going Up

Speculations that the US real estate market might enter into another recession in 2020 are just that – pure speculations. There are no major signs to show that this will be the case. On the contrary, the vast majority of real estate experts expect the values of homes for sale in the US housing market to continue increasing, albeit at a lower rate. If you are starting to think whether investing in a rental property for sale is worth it in 2020, rest assured that it is. The slowdown in the rate of real estate appreciation is actually a good thing as it will prevent another housing bubble from happening any time in the near future. Moreover, only a small decrease in the appreciation rate is expected, while real estate prices will actually continue rising faster than the inflation rate.

Lack of Affordability Is Not a Defining Factor

Many real estate experts including real estate investors are increasingly worried about the growing lack of affordability in the US housing market. However, this is not a constraining issue in the overall market but more of an isolated problem in certain markets. It is absolutely true that buying an investment property in locations such as the San Francisco real estate market, the Los Angeles real estate market, and the New York real estate market is challenging, especially for those just getting into real estate, but other places like the Dallas real estate market and the Phoenix real estate market offer more affordable real estate listings. With the right tools,  new real estate investors can easily find income properties at reasonable prices with good cap rate and good cash on cash return. All in all, buying cheap properties is still a viable possibility in many locations, which is one of the reasons that make real estate a good investment strategy in 2020.

3. Interest Rates Are Expected to Remain Low

Experts predict that interest rates will continue being relatively low at around 4% in 2020, which means that those who wonder how to invest in real estate due to insufficient cash capital can resort to a mortgage. The fact that you don’t have to use only cash makes buying a rental property one of the best investment strategies out there – in 2020 and in general. Buying an investment property all in cash is hard even for experienced real estate investors, not to mention beginners. However, you should not worry about how to make money investing in real estate if you don’t have enough cash as financing a property with a mortgage will be an affordable option. The expected low interest rates are one more reason why now is a good time to become a real estate investor.

4. The US Housing Market Is Transforming

The US real estate market has been a seller’s market for a few years now. While a sudden change to a buyer’s market is not expected to take place in 2020, the slow transition in this direction which started in 2019 is forecast to continue. The stabilizing inventory, the slowdown in appreciation, and the low mortgage interest rates are all pointing to this real estate trend. This will be a very important positive factor, especially for beginner real estate investors, who will not need to enter into bidding wars and compete with home buyers and more experienced property investors. Meanwhile, if you are interested in locations that are expected to be definite buyer’s markets in 2020, have a look at the Nashville real estate market and the Atlanta real estate market.

So, is real estate a good investment in 2020? Yes, definitely yes. Real estate properties continue to head the list of the top investment strategies as they allow investors to make money in both the short term and the long run while keeping their full-time job. As a new-comer, just remember to start small – with a single family home or a duplex – and consider hiring a rental property manager to avoid stress and to enjoy your rental income.

Reference : Mashvisor.com

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