Are you searching for the best investment to grow your money? Maybe you're wondering if real estate is the right investment for you? Discover 3 key reasons why real estate remains the best investment and consistently beats stocks, crypto, and gold. Plus, we'll address 3 common objections to investing in real estate to find out if they're legit or just excuses.
Why Real Estate is the Best Investment
For nearly 20 years, our organization has coached and mentored many of America's most successful real estate investors. We've been a part of thousands of house flips, and we've helped countless investors create long term wealth with real estate. For years now, our team has challenged real estate against other investments to find out how it stacks up. Phil has a great video that goes into the details, Investing in Real Estate vs Cryptocurrency, Stocks, Startups, and Gold. Without fail, real estate has always prevailed because it offers an unfair advantage. But what is that? There are three key reasons real estate is best, and you want to understand those when you're comparing other investments.
Appreciation
First, real estate appreciates over time, despite market fluctuations, bubbles, and economic adjustments. As an investment over the long term, real estate always goes up in value. Although you need to maintain the property, the value of the land itself continues to rise. Ask anyone if they're happy that they sold their property 10 years ago, and the answer is a resounding “No!”.
What would it be worth now? Especially in inflationary times as we've been experiencing. Many regret selling their property years ago because of the significant increase in value it would have now. In inflationary periods, and even when interest rates are high, real estate still appreciates.
Depreciation
Second, real estate provides the benefit of depreciation, allowing investors to spread out the cost of the property over its useful life. For residential properties, this is typically 27.5 years. You get to deduct this as an annual loss, which reduces taxable income. But on top of that, there are other government tax loopholes that real estate has that you don't get with stocks or other investments. Tax advantages exclusive to real estate, like accelerated depreciation methods (you can fully deduct some of the improvements you made to the property) and the deferral of capital gains through a 1031 exchange.
Income
The third key benefit that real estate provides is cash flow. Real estate can generate consistent income through leasing or renting properties. Over time, this rental income tends to increase, even though some assets may yield more cash flow than others. The taxable income is balanced by improvements and depreciation, and tenants contribute to paying your debt as you build more equity in the property.
So those are the 3 key reasons real estate always wins out as the best investment:
· Appreciation
· Depreciation
· Income
Leveraging Real Estate Investments
Beyond these benefits, you can also leverage real estate investments to accomplish even more. You don't need to pay all cash up front; you can borrow. That means you can leverage your cash four or five times over, or up to 20 times its amount if you're house hacking. Devin has a great video on this if you're new to it: How to Live Rent Free by House Hacking.
You can also borrow against the equity in your investment property through second mortgages, home equity lines of credit (HELOCs), and lines of credit. They can be used to make improvements, to increase cash flow, or to purchase more investment property.
No investment Like Real Estate
Ask your financial advisor, your investment advisor, to direct you to an investment besides real estate that has provided incredible appreciation consistently over the course of the last 200 years, while at the same time providing tremendous tax deductions and growing positive cash flow. They're going to tell you the only thing that can do that is real estate. No other investment gives you all three, appreciation, depreciation, and income.
Let me know in the comments if you have an investment that offers more benefits than real estate or if you're like me and are kicking yourself because you sold an investment property and wish you still owned it!
3 Common Objections
When it comes to choosing the best investments, there are three main objections we consistently hear.
Real Estate Market
The first common concern is that the real estate market is down in certain areas. Maybe your area seems slow, or at least it's not growing by leaps and bounds like it was several years ago. It's too easy to convince yourself that the grass is greener on the other side of the fence. Don't fall into this fallacy! You're not buying the city; you're strategically buying a property, adding value and creating profit. (Check out our recent video: Best Areas to Invest in Real Estate). You may need the help of a mentor to figure out the sweet spot in your area, but the problem is not your market.
Property Management
Another investment objection we hear is that real estate requires a lot of property management. Keep in mind that every investment requires management. Otherwise, your results will suffer. Your stocks are managed, just not by you, so you have very limited control over them. With real estate, you have control over your investment: you start by buying right and ensure you hire good property management to manage your investments. You can be more involved if you choose, but at minimum, you want to have experienced property management in place that can handle everything from leasing to rent collection and repairs and maintenance. That will ensure you have a solid return, again, considering you bought right from the outset.
Even with a property manager though, it's on you as the investor, as with any investment, to manage the manager. Review numbers at least quarterly and make informed decisions to maximize your return on investment. But the fact that investment property requires management is not a legitimate excuse.
Interest Rates
The third objection we hear is that interest rates are too high. But here's a simple, wise truth to consider. People will always need a place to sleep. Whether rates are high or rates are low, people are always buying houses. They may have to adjust on what they're buying, but there are always buyers in every market. While some predicted its demise over the past few years with high interest rates, real estate is still going strong.
Check out our video for more: Should You Wait Until Rates Drop to Invest in Real Estate?
Real Estate Is Always the Best Investment
In real estate and really overall in life you can make excuses, or you can make money by taking action. Real estate is the best vehicle there is to have the opportunity to take action and create fast cash, cash flow, and long-term wealth. There's no other investment that can simultaneously provide you with appreciation, depreciation, and income.
There are new investment opportunities coming at you every day. Lots of new startups and a lot of scams as well, but real estate is tried and true. It can absolutely simplify your investing and your life. Put your time and energy into learning real estate and you're going to have a great financial life. You don't have to keep learning new tricks. Keep it simple. Learn real estate and you'll control your financial future. The people that we teach that learn to do this right, they just keep doing it.
Every Successful Real Estate Investor Has a Mentor
Real estate remains where the money is made in a world of a lot of noise. You can find the signal and keep your life simple when it comes to money. Get the right mentoring. Learn how to be a great real estate investor and stick with it. And we're the very best in the industry at this business. If you want to transform your life, join our apprentice program and our team will mentor, coach, and guide you to financial success. To learn more about how you can be mentored by our team of experts, fill out an application for our Apprentice Program here: Freedom Mentor Apprentice Program.
If you have questions for us, text FREEDOM to 305-315-8030 or post a comment below.
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