Franklin D. Roosevelt said, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
Roosevelt died almost 75 years ago, but the sentiment remains true. Even after the Great Recession of 2008, real estate is regarded as a safe investment. But will it build wealth?
According to the Morgan Stanley Wealth Management Investor Pulse Poll, 77 percent of millionaire investors own real estate and 35 percent own related investments.
The poll asked about alternative asset classes and professional investment advice, but its findings that relate to real estate are especially convincing arguments to use when asking a person to invest hundreds of thousands of dollars in real estate.
Why is real estate different from other investments?
The American Genius talks a lot about cryptocurrency, stocks and alternative investing, but real estate consistently has value, not only for high-dollar investors, but also for average Joes. Investorys buy in hopes that an item will appreciate to be able to sell it for a profit – gold, art, jewelry, and crytpocurrencies typically sit in a vault until you’re ready to sell.
Real estate, on the other hand, has the capability of pulling in money each month. Hopefully, the rent you can take from a property is more than the expenses. Unlike other investments, where you really taking a gamble on appreciation, with real estate, you can crunch the numbers to make sure your property *will* generate income.
You’re not betting on whether the price will rise. As long as the cash flow covers your expenses, you’re safe.
Real estate continues to have the best chance of building wealth. Most investments do appreciate, but it’s at the whim of the markets.
Real estate gives you options to increase the value of the asset without waiting for the market to improve. Fix and flip properties are a common method, but investors don’t have to buy a fixer-upper to add value to a property. Combining inflation, appreciation and equity improvement, it’s easier to see how real estate can give you big results.