Why Real Estate Investing?

The big question is, “Why real estate investing?”

Well, for one thing, more millionaires are made from real estate investing than any other type of investing. Anyone can do it there are no licenses or certifications required. Additionally, real estate is real!

Here’s an example: Let’s just say we have two documents. In my right hand, there is a deed to a house that has a retail value of $300,000. In my left hand there is a stock certificate with a value of $300,000. These two items have the exact same financial value. Let’s just say that something incredible happens and the stock market plunges in one day and the $300,000 stock certificate is now only worth $100.  Now, I know you’re saying that that could never happen, but just stick with me for a couple more minutes. To make this example fair, let’s just say that on that same day the real estate market plunged as well. The house is now also only worth $100! As terrible as this situation is, which would you rather have? Of course you would prefer to have the house, because even though it also is only worth $100 it has some additional value…

You can live in it. You could rent it out. You could trade the occupancy there for other items. In other words it has intrinsic value. That is what I mean by saying that it is real it is a physical object it is real in a way that stocks and mutual funds and other financial investment vehicles aren’t.  But the benefits don’t stop there. If your stock is not performing as well as you would like is there anything that you can do to improve its performance? Not really. However if your rental property is not bringing the type of rental income that you would like, perhaps it needs a makeover, and then it can produce more monthly income. The benefits still don’t stop there. I cannot ask a stranger to purchase $100,000 worth of stock for me. However, I can put a tenant in a rental property.  Who is actually paying for that rental property? The tenant. Whose asset is it? Mine. So a perfect stranger will actually purchase real estate as an asset for me! This is awesome! I can actually have other people purchase real estate for me. I don’t have to tell you about the tax benefits associated with real estate investing. There’s also the matter of appreciation over time. I don’t know any real estate that is at the same value that it was when I was in college. Don’t worry about how long ago that’s been because I’m not going to tell you. Suffice it to say I know you get the point. Supply and demand is a powerful force in any economic equation, and hey…

They just aren’t making any more land.

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