14 Jul 8 Reasons to Invest in Real Estate (Part 1)
“Real estate is at the core of almost every business, and it’s certainly at the core of most people’s wealth. In order to build your wealth and improve your business smarts, you need to know about real estate.” (Donald Trump)
I agree 100% with that statement. I have learned a great deal about wealth and business through real estate. Over the years, I have looked into and tried different types of investments, but I believe that real estate is truly the best investment for the average person. Here are my top 8 reasons to invest in real estate.
Demand—Everyone needs a place to live and because of that I don’t have to sell to get customers. Just like everyone has to eat, so groceries will always be around. The same goes for real estate. Everyone has to have a place to live, so real estate will always be around. Real estate has built in demand. That is much different from other types of businesses. In other businesses, you have to fiercely market your product, but in real estate you don’t have to sell to get customers. The demand is already out there. Everyone needs a place to live! Of course, there are always things that will influence the demand of the housing market. Location is one of those factors. The old adage is true: “location, location, location!” It is always better if you buy real estate for rental property in high-rent areas or in highly populated ones. Check out the blog from last week that gives 6 characteristics to look for when investing in real estate.
Leverage—Leverage allows you to own a $100,000 home when you only have $10,000 and to get a 100% cash-on-cash return. So, when the $100,000 property goes up in value, your 10% return is on the $100,000 not on the $10,000 you invested. This is very different from most other investments. For example, in stocks you can only purchase the worth of what you currently have. If you said to your stock broker, I would like $100,000 worth of stock in Apple but I only have $10,000. Your stock broker would probably tell you to come back when you have the $100,000 or you would be able to only invest the $10,000. Real estate allows you to magnify your winnings. Although, leverage works both ways. It can magnify your winnings but it can also magnify your losses. It is important to always invest carefully.
Control—You have direct control over your investment. I can’t control what happens to stocks, but I have an element of control when it comes to a physical asset like property. If your property is struggling to bring in cash, then it is in your power to change that. Paint it, put in new carpet or floors, landscape it, or update it a bit. There are plenty of resources on the internet to find inexpensive ways to improve your property. Check out HGTV or Pinterest. It is easy to change something about the property to attract renters. Once you do, you will more than likely bring in the cash!
The demand is there. Your winnings are magnified. You have direct control. Sounds like a good investment to me. How about you?
I will share more of the 8 reasons to invest in real estate next week. Come back to learn more. You can also learn more about real estate by joining my next Real Estate workshop. September 9-11 in Denver, Colorado.