For the 9th year in a row, Americans have chosen real estate as the best long term investment. That’s according to a recent survey by Gallup. This year, more people than ever before chose real estate as the best investment over several other options.
How Real Estate Compared to Other Types of Investments
45% of Americans chose real estate as the best long-term investment over stocks (24%), gold (15%), savings accounts (9%) or bonds (4%). Gallup started this survey back in 2011 and real estate has been the front runner since 2014. This year is the highest percentage of people who have ever selected real estate as the best long term investment.
Why Real Estate is a Great Long Term Investment
With real estate, you can leverage your investment. If you have $20,000 to invest, you would likely be able to get $20,000 worth of stocks. But with real estate, you can put that $20,000 towards a down payment for a six figure home and get a loan to help finance the rest. As you continue to pay your mortgage, you are building equity for yourself. You only have to have a small percentage of the home’s value to invest in the beginning and then you can build from there. As you continue to build equity, you can actually use it to purchase another property. Let’s say you have $50,000 in equity, you can refinance to take that money out and use it as a down payment for another property and continue to build your portfolio of properties. You can generate income by renting out the property. Whether you want to house hack and live in the property and rent out the extra space or just rent out the entire place, you can generate income to help you pay off your mortgage. If you have already paid it off, then that’s just additional income in your pocket each month. You can increase the return on your investment as it appreciates in value. Now this is not a guarantee, but if the value of the home is appreciating, you will be in a great position. In a market like we’re seeing today where seller’s are getting offers well above asking price, you’ll likely make a large profit when you sell the home. It builds generational wealth. You can pass down the assets to your family members and with real estate, it’s an appreciating asset. So they can continue to earn income through that property or they can sell it and make a profit. You’ll get tax benefits. When you own a home, you can write off certain expenses like mortgage interest. If you’re a landlord, your home is like a business so you can write off things like maintenance, insurance, HOA fees, etc.
How Real Estate Investments Can Help During Times of High Inflation
As inflation reaches its highest level in decades, owning a home can provide financial security and protect you against some of the effects of inflation when it comes to housing. When you own your own home, you are not at risk of your landlord significantly raising your rent and being forced to move if you can’t afford it.
When you buy a home, you lock in a mortgage rate and will have a fixed payment each month typically over 15 to 30 years. This ensures that you will be able to afford your monthly housing payments and not be subjected to it changing depending on inflation.
Inflation can actually be beneficial to homeowners by helping their property increase in value and build up your equity. Experts have said that real estate is typically a good hedge against inflation. Regardless of the state of the economy, people will always need homes and that demand might fluctuate, but it will always be there.
Real estate is a great long term investment and the sooner you can start building your real estate portfolio, the better. We understand that buying a home is a big deal. It’s a big financial commitment, the return on the investment is not a guarantee and being a landlord can be time consuming and tiring. But if you are in a position to be able to purchase a home, we cannot recommend it enough. Especially in the current economic environment. Do you have questions or concerns about the current market? Send us a message today!