As promised, we will begin our series regarding the advantages of real estate investing and development.
The first point we will discuss the value of real estate and the fact that it appreciates over time. A thoughtfully chosen piece of property is almost guaranteed to appreciate over time, no matter the circumstances and the financial state of the country. The right piece of real estate will generally appreciate at a rate that is much higher than expected annual inflation. No matter the location, price, or condition of the property, there is always a chance to buy a quality property at a discounted rate, make improvements to increase equity and eventually over the long-term or the short-term (depending on the market) sell it for a profit.
In the financial industry there is a very commonly known phrase or words to live by, which is “buy low, sell high.” The same phrase of philosophy and level of patience applies to real estate investing and development. Real estate always has a basic or base line value, because it is something tangible that can be used for one purpose or another, for example to live in, to rent out, to sell, to develop and so on and it’s physical existence will always have a value higher than $0. That is what is a major differentiating factor between the stock market and the real estate market. A stock can plummet down to $0 due to circumstances outside of the investors control, but a property is tangible and on a piece of land that is equally tangible. The raw land itself and existing property in addition to any improvements or changes made will always have value, and even though the value can fluctuate it will always be worth something, and over time “something” will be higher than the initial investment.
Real estate is something that can be used to make money this year, next year, next decade or even later depending on the circumstances, or it can be a tangible useful asset that gets passed on for generations. A stock that is valuable now may not even exist 10 years down the road if the company is disbanded and shut down and stops existing. Of course, we are not saying all stock market investing is bad, however, diversification and multiple metaphorical baskets for your metaphorical eggs is highly recommended.
In conclusion due to it always having value and the extremely high chances of appreciation, we recommend having real estate as one of your asset building options or “baskets.”