Real estate is one of the oldest and most reliable forms of investment. From the first moment that someone created an ownership deed for a piece of property and then later sold it for a profit, it has held appeal for every would-be investor.
Making the most of a real estate investment is heavily centered on the investors. There are several reasons why so many more people feel comfortable with real estate as opposed to other investment instruments.
We Are Familiar With It
Real estate success is tied largely to the fact that it’s a purchase most of us are already making. A few people may be renters for life, but a lot of us have plans in place to buy a home at the first opportunity. And because homeownership is so important to us, we do whatever it takes to remain current on the mortgage and keep up the property, not as an investment but because it’s home.
In time, of course, the kids move away and that four-bedroom, three-bath property can prove a little too spacious for us. When we choose to downsize, we can find ourselves in a very nice position where we have a lot of equity in the existing home and are able make a nice profit after selling the large home and buying a smaller one.
Of course, you don’t have to wait until you’re 60 to do that. Many people buy small as soon as they can and then upgrade as often as they can afford to do so, building equity that catapults them into a bigger home each time. They follow the advice of the experts at companies like Allied Van Lines to ensure an efficient, careful relocation that frees up more cash for the rest of the process, and in time, they can own a home debt-free.
It’s A Finite Resource
The most basic concept of economics is that scarcity increases the price of goods and services. A scarce good gets bid up in price, and real estate is a perfect example.
We aren’t making any more land in this world, so the market for it will always be strong. Sure, there are ups and downs locally; when an area suffers severe economic conditions like Detroit has, the land can become almost worthless. But eventually, it will often come back.
Contrast that to stocks, which can be split repeatedly to increase the number of shares. The same is true of government bonds, which can be issued almost at will. It’s clear that real estate appeals to investors just because we only have so much of it available.
We Don’t Need Help
Some investments are so complicated that the layperson cannot deal with them. Something like bitcoin is just more than most people can comprehend. But a piece of land, a house, a store building? That we can handle.
Buying a piece of land is considerably simpler than many other financial transactions. In fact, if the purchase is made in cash, a handwritten deed can often suffice. Investors who are trying to keep their investments simple and independent will gravitate immediately toward real estate.
Of course, there are more complex ways to get into real estate. You could buy into a holdings company or invest indirectly through real estate stocks. By and large, however, if you want to put your money into some real estate, you can do that with minimal assistance (and minimal fees). That is the value of real estate investment.
When we talk about the various ways to grow our money, the conversation often centers around growth rates, fees, and options to leverage faster progress. But what doesn’t get discussed often enough is our comfort level. Everybody knows that the stock market is lucrative, but not everybody is comfortable opening a quarterly statement and finding that their investments have lost value. Many of us prefer to put our money in something tangible, something that will never disappear. If you’re that kind of investor, real estate could be your best choice.