6 Ways Real Estate Is Your Smartest Investment

Are you scared to have your money in the stock market (like I am) or also fed up with almost no return on investment with your money at the bank? Do you instinctively like the idea of investing in income producing real estate with results you can see?

Here are seven reasons why investing in real estate is an excellent choice for protecting and growing your wealth:

1. Positive cash flow.

One of the biggest benefits in real estate investments is that leases generally secures the assets. This provides a regular income stream that is significantly higher than the typical stock dividend yields.

2. Low-cost debt leveraged to multiply cash flow.

Placing “positive leverage” on an asset allows for investors to effectively increase positive cash flow from operations by borrowing money at a lower cost than the property pays out. For example, if a property generating a 6 percent cash-on-cash return were to have debt placed on it at 4 percent, the investors would be paid 6 percent on the equity portion and approximately 2 percent on the money borrowed, thereby leveraging debt.

3. Hedge on inflation.

For each dollar that is created, there is a corresponding liability. Real estate investments have historically shown the highest correlation to inflation when compared to other asset classes, such as 10-year Treasury notes and corporate bonds.

As countries around the world continue to print money to spur economic growth, it is important to recognize the benefits of owning income producing real estate as a hedge against inflation. Generally speaking, when inflation occurs, the price of real estate, particularly multi-tenant assets that have a high ratio of labor and replacement costs, will also rise.

4. Capitalize on the physical assets.

Income-producing real estate is one of the few investment classes that, as a hard asset, has meaningful value. The property’s land has value, as does the structure itself, and the income it produces has value to future investors. Income producing real estate investments do not have red and green days, as does the stock market.

5. Asset value appreciation.

Over time, more and more inflation has made it into the economy, drastically reducing purchasing power. However, income producing real estate investments have historically provided excellent appreciation in value that meet and exceed other investment types. Properties historically increase in value as the net operating income of the property improves through rent increases and more effective management of the asset.

6. Feeling the pride of ownership.

The right property in the right location with the right tenants and ownership mindset can produce a tremendous pride of ownership factor that is highest among all asset classes. Homeownership is out of reach for most people. Imagine owning thousands of multi-family housing units instead?

Credit: https://www.entrepreneur.com/article/250759