Why Real Estate is Still a Great Long-Term Investment

Reasons Why Investing in Real Estate is a Long-Term Investment

Historical Appreciation Data, Advantages vs. Disadvantages, and More!

When you think about your future, it’s always important to consider your investment strategies and your retirement plan. After all, who wants to be working when they should be enjoying themselves and retiring from their jobs? An important way to make sure that you retire at an age where you can still go out and do the things you’ve always wanted to do is to make sure that you have a solid investment strategy in place. For today’s blog, we’ll be talking about why real estate is still a great long-term investment for those looking to build wealth, some different methods of investing in real estate, and the advantages and disadvantages it can bring to the table for you and your family.

Thinking of making a change in your living situation?  The Ask Cathy Team is ready to answer all your questions about today's real estate market and whether moving is the right thing for you! Connect with us here!

Advantages of Investing in Real Estate

One of the primary advantages of investing in real estate, is that an investment in real estate is a great investment against inflation, which is still affecting our economy today, even with the Fed doing everything it can to bring inflation down to its two percent goal. When inflation raises prices across the economy, owning a home can protect you from inflation by having your monthly house payment be locked into a mortgage rate, instead of rent that can increase year by year. Additionally, if you have an investment property, you can collect a consistent monthly income from your tenants, and enjoy any appreciation in your home’s value as well. Below is a chart detailing the history of home price appreciation, adjusted seasonally.

Data Courtesy of St. Louis Federal Reserve

There are also certain tax advantages to owning an investment property, including the ability to deduct certain expenses associated with owning and maintaining an investment property. These tax deductions can typically be applied toward your mortgage interest, property taxes, management fees, property insurance, maintenance costs, etc.

Investing in real estate also allows you to diversify your investment portfolio, in a product that will typically appreciate over time. The stock market can be a far more lucrative investment, but the stock market is also particularly volatile, and in times of economic hardship, your real estate investments could actually be going up in value compared to any potential losses in the stock market, protecting you from an overall loss in your portfolio.

Finally, you can begin investing in real estate with the ability to leverage funds, which is one of the unique ways that real estate investors can get their foot in the door. Unless you are wanting to buy your investment property in cash, you will need to get a loan that allows you to own a property by only putting in the down payment.

Disadvantages of Investing in Real Estate

Of course, there are a few disadvantages to investing in real estate, including the fact an investment in real estate is not a liquid investment. What that means is that once you buy a property, you need to sell that property, or the portion that you own if you are using a different method of investing in real estate than owning your own investment property before you can get your money back. Compared to other options like stocks and bonds, it is more difficult to get your money out as fast as you might like.

Additionally, an investment in real estate is a true long-term investment, as the title of this blog might suggest. You can absolutely charge rent if you have tenants and receive monthly payments, but you also need to pay that mortgage every month, and there are also costs associated with maintaining your property that you need to be aware of as well. Home appreciation is where you can make the bigger profit down the road, but that process typically takes years to get to the point where you would be thinking about selling your property.

Want to know what your property is worth?  We have that information here! 

Thinking of Investing in Real Estate? Contact the Ask Cathy Marketing Group for Your Complimentary Consultation!

Whether you are thinking of purchasing an investment property, or are thinking about buying a property for yourself, our Ask Cathy agents can help you evaluate your options, and determine the best financial path for you and your family. Our agents have decades of experience helping their clients navigate the housing market, and can help you with your next home purchase as well. Contact a member of our team today by filling out the contact form below, or by calling us at (816) 268-4033!

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