Real Estate Investing Is Back

The best place to invest your money for a high return and relatively low risk has always been difficult to determine. Now that we are emerging from challenging financial times, many are again looking at the best way to increase the value of their portfolio. While the stock market is back to levels we haven’t seen since 2008, its fragility is a concern to many. Conversely, safer avenues such as savings or bond issues are not attractive with interest rates at historic lows and no protection from inflation. Gold and Silver may help protect against the anticipated inflationary cycle to begin, but does not provide any return while holding the investment.

That’s why a number of investors are moving back to investments in real estate. Prices have either hit bottom, or are hovering close to it, and investment in real estate has some unique benefits. Here are several benefits and distinctive qualities of owning real estate as part of your overall portfolio.

Income plus Capital Growth. Real estate investment can provide a steady income stream for owners. Rental revenues for both commercial and residential properties can pay down the debt of the property while still providing a positive revenue stream. Additionally, the value of the property will usually keep up with inflation. At this time, a combination of increased demand for the leasing market, depressed prices on property and historically low interest rates, make real estate investments very attractive.

Flexible Maturity. Real estate does not have a maturity date. As an owner, you can sell your property at a time that is convenient and profitable for you. Market demand can impact the liquidity of your investment, but if you have the resources to minimize your debt load, you can wait out market dips for a more optimal selling environment. Even though you are not limited as to when to sell, plan on some cushion time between the time you’d like to sell and when the transaction is complete.

Real Estate is a Tangible Asset. You can’t walk around an investment that exists on paper. No matter what the market does, the tangibility of real estate ensures that it will always retain some value. This is a comforting thought to many after the recent catastrophic falls of several seemingly solid financial institutions.

This tangibility also means that you have some physical control over it. You can make repairs and improvements to directly increase its value, unlike a stock or a bond. The flip side to this is that it does require management. Maintenance can either be handled by you directly, or by someone you hire to do so.

Knowledge is Key. The stock market is highly regulated, and insider knowledge is illegal. That is not the case with real estate. With the right information you may be able to see profit opportunities that aren’t recognized by other investors. A knowledgeable expert can help you search out hidden gems unseen by other potential buyers.

A good understanding of quality of a property’s location, tenant quality, and past rental or income history will guide you to making the right decision. Insider knowledge can also help you with any development potential by identifying business opportunities in communities that have a need of a particular product or service. Finding a reputable tenant, and building a space for them to lease can yield both high income and capital returns.