5 POWERFUL Reasons Why Investing in Real Estate is the Smartest Investment in the WORLD
- Real estate is consistent & predictable
- You have the power to increase the value of your investment
- Real estate uses the power of leverage
- You make your money when you buy
- You do not need to sell a property to be paid out
- Property prices do not crash or skyrocket overnight…intensive monitoring is not needed
- History has proven that real estate prices follow a cycle…it is much easier to predict when prices are considered ‘low’ or when they are getting ‘high’.
- If a community benefits from a new transportation improvement, property values in that area will increase. Therefore, buy when you hear that the transportation improvement has been approved or when they start construction. Property values will increase once the transportation improvement is complete. A very predictable increase indeed.
- When interest rates change considerably, the appreciation rate of properties also changes, however there is usually a six-month lag, giving you lots of time to respond as you see fit. As interest rates decrease, real estate becomes more affordable and the increase in demand makes prices rise, thus causing an increase in the appreciation rate. If interest rates go up considerably, there will be less demand and the appreciation rate won’t be as high. Note that this doesn’t mean houses will decrease in value. A decrease in house prices is very rare.
- Many things can increase a property’s value (new paint,
new carpets, exterior makeover for increased curb appeal,
add a room, change light switches and doorknobs, increase
rent, suite the basement, change the use: apartment to
condo or house to infill, landscaping, etc…)
- What can you do to increase the value of stocks or mutual
funds?...NOTHING! These returns depend on uncontrollable
factors, which makes them inferior to real esate.
- To purchase $200,000 worth of stock you need $200,000.
To purchase a $200,000 property you only need a small
portion of this amount.
- Mortgages allow you to purchase properties with only
5 – 25% of the total price.
- Other investors are often keen to give you the money
for these down payments, as they know the returns on real
estate have always been consistently higher than the stock
market.
- When you buy $200,000 worth of stock you always get
$200,000 worth of stock. However, when you buy a property
for $200,000 it could easily be worth much more than $200,000.
- Motivated sellers, divorce situations, inexperienced
appraisers, poor comparables, etc… are all reason why
you can make your money in real estate immediately when
you purchase the property. There is a deal of the decade
every day.
- If you want to get money out of stock or mutual funds,
your only choice is to sell. You will then have to pay
capital gains taxes, thus reducing the total amount you
pocket.
- To get money out of a property, you simply refinance
the house at the new appraised value, pay off your old
mortgage, and pocket the difference. Because you haven’t
sold anything you pay no capital gains tax!