Today we’re discussing even more assets of real estate investing! Remember our very first blog? It was also about 5 Benefits of Investing in Real Estate but now we have even more for you!
Last time we talked we said the 5 benefits of real estate were the “IDEAL” benefits: Income – Depreciation – Equity Buildup – Appreciation – Leverage. We also discussed a few bonus benefits including: Passive investment – Diversification of your portfolio – Control of assets
We know real estate is an IDEAL investment, but today we’re going to show it’s also a SMART investment.
SMART stands for: Store of Value – Market Cycles – Access to Funds – Refinancing – Tangible Assets. You can also watch the video on this blog here: 5 More Benefits to Real Estate Investing
STORE OF VALUE
A house maintains and grows its value quite well because it’s a basic human need; shelter. When new inventory of homes pop up, it doesn’t devalue current properties because houses take a while to build. This is unlike when more dollars are created as dollars can be printed out of thin air with the stroke of a keyboard. Usually demand increases due to an ever-growing population so real estate tends to keep its value at the same rate or higher than inflation numbers which is usually around 3% per year. If you’re in the business of preserving wealth, real estate is the asset class for you. Just ask some of the world’s wealthiest families.
Real estate values can go up and down, and they do on a pretty regular basis. They often follow a 10 year boom and bust cycle, similar to the stock market. But is this a feature, or a bug? Properties go on sale at cheap prices during market downturns and real estate investors are always there to scoop them up! If we’re in the business of building wealth, it’s great to see your properties appreciate in value and give you equity to tap into, but you should also be jumping for joy in market downturns because you can go shopping and expand your portfolio!
ACCESS TO FUNDS
Owing real estate is part of the story of the American Dream. It’s in our blood as Americans to want to own our own property after our country’s founders escaped from the tyrannical feudal system of King George III where all land was owned by the monarchy. It’s no wonder our government now promotes owning real estate through federally backed programs through the Federal Housing Administration, VA, and Fannie Mae and Freddie Mac. Not only is it fairly easy to qualify for a conventional loan, but there are so many programs out there that can make it even easier! Talk to your loan officer or set up a call with one of investment counselors here at Rent to Retirement to find out what kind of programs are out there so you can have access to owning real estate today.
Refinancing is an extremely powerful tool in real estate. This builds from the control benefit we talked about in the first 5 benefits blog. Not only can you control 100% of a property with only a 20% down payment, but you can also refinance a property allowing you to lower your interest rate or pull equity out, while still controlling the asset the entire time. Unlike stocks, you usually have to sell them to move into a more favorable position which creates a taxable event. In real estate, this is not the case.
The biggest benefit I see with real estate is that it is a tangible asset. I’ve always loved real estate because it’s something you can touch and feel. For me, this has made learning about real estate so much easier than other esoteric investment products. Real estate can be lived in, used for storage, used for running a business, or just torn down and sold for scraps of copper piping and lumber. That’s the fun of it! The value of real estate almost never goes to zero because there is always something left that can be used for a real physical purpose. In times of market uncertainty and inflation, investors run to physical assets like real estate and gold.
Making SMART Investments
I’m going to reuse what I wrote in our first 5 benefits blog
“Invest in what you know…and nothing more.” – Warren Buffet
It’s hard to believe it’s been over 7 months since making our first blog on the 5 benefits of real estate investing! As the industry progresses, more and more benefits begin to reveal themselves so get involved and buy your first property! At Rent to Retirement we’re happy to help you start this journey today!