by Nicholas Lambert
Why Invest in Real Estate?
There is no question that real estate is a very solid long term investment. If done right, it can be a great short term investment as well. While real estate may not generate returns that are as high as what can be obtained in the stock market, it is certainly much less volatile and risky. Because stock transaction can occur much more rapidly, almost instantaneously, the stock market is much more prone to move based on momentum and feeling, and can move sharply in either direction.
When compared with less risky forms of investment, such as bonds or putting your money into a savings account, the returns from real estate are far better. At a bare minimum, real estate will keep up with inflation.
Aside from much greater stability then you would find in the stock market, and far better returns then any other form of traditional investment, investing in real estate offers several other distinct advantages.
The first is control. Many people who have investments in stocks have them through some type of mutual fund, 401k or other investment vessel. With a fund or 401k, you have little to know control over which stocks are purchased. And the companies you invest in are generally run by a board and its officers, leaving the investors with little control over anything, short of maybe a few shareholder votes. With real estate, whether your own home or an investment property, you are the one in control. You make the decisions, you’re responsible for it, and its success or failure rests in your hands.
The second advantage for real estate is that it is a tangible asset. If it is your primary home, or even a vacation property, you get to live in it, use it, experience it and enjoy it. There is nothing tangible with a stock or bond investment, or by throwing your money into a savings account.
If your investment is in an income generating investment property, you get the pride of ownership, coupled with the cash flow coming in twice a month. Sure, a stock investment can appreciate over time and pay dividends, but there is still nothing tangible about it to give you a sense of enjoyment and accomplishment.
Finally, there are tremendous advantages in the way real estate can be acquired. Unlike stocks, bonds or a savings account, real estate can be purchased for less than the market value of what its worth. Imagine that! On top of that, you can use leverage to acquire it, thus increasing the amount of investment you re able to acquire. That’s unheard of in other investment markets.