Investing in real estate is seen as a great way to earn higher-than-average returns at the same time as diversifying your portfolio. When done appropriately, real estate is arguably the highest-earning asset class a portfolio can have.
There are multiple reasons one will choose to invest in real estate and we’re going to give you a rundown.
The first and most popular reason people opt for real estate when looking for investments is because it is a safe investment. Rarely will you see your investment losing value and if it were to lose value this tends to be short term.
Unlike currencies like the Naira or Dollar, real estate doesn’t lose value to inflation year after year — it performs better. Smart investors can even set themselves up well in down markets by buying value-add assets such as many did after the housing bubble burst in 2008.
The second reason real estate is a popular investment is because there are multiple ways to invest, such as, Real Estate Investment Trusts, Crowdfunding Real Estate Platforms, investing in your own home, investing in rental properties, investing in real estate by flipping properties. This provides multiple avenues into the property market.
A third reason to invest in real estate is the fact that there are several ways the asset class increases in value. You can drive up the value of your property without market factors through forced appreciation, when you make improvements to your property you force its value to appreciate such as making renovations, doing this can increase the price the property can be bought for or how much a suitable rent to charge.
Reason number four to consider investing in real estate is that it diversifies your portfolio. The most successful investors tend to be the most diversified. With real estate you can invest whether or not you are an accredited investor or not.
A fifth reason to invest in this market is that governments tend to love and be kind to real estate investors as they are developing land and property for the public, as a result they tend to enjoy favor in tax season, which can be in the form of; Property tax deductions, travel costs associated with your investment, cost of repairs and maintenance, depreciation deduction/Cost segregation study, legal and management services deductions. Real estate investors are also more likely to receive favor from banks, in the form of loans.
Whilst there are many more reasons to invest in this asset class. The last and sixth reason many people invest in real estate is because it can be passed down from generation to generation. It can be left in one’s will for their dependents.
