Real Estate has always been one of the tried and true ways to build wealth. According to CNBC, 23% of Americans in 2022 stated that Real Estate is the best way to build wealth, ahead of investing in the stock market, or starting your own business. Most if not all, investors have at least a little Real Estate in their portfolios.
Why is Real Estate A Good Investment?
- Home prices appreciate over time: In comparison to buying a car, where the value of it depreciates over time, property values appreciate. The housing market has its ups and downs, but historically property values have appreciated over the long term.
- You Are Building Equity: While your house is appreciating, you are also making payments on your mortgage. The difference between the value of your property and the amount you owe on your mortgage is called equity. As you make payments, you are building your equity over time. Once you pay your mortgage in full, you now have a tremendous asset.
- Hedge Against Inflation: As the value of the dollar decreases year over year, the prices of goods and services rise year over year. The beauty of owning Real Estate, is that it is a fixed cost. So while the price of everything else in your daily life is increasing, one of your biggest expenses; your housing payment will always stay the same.
- Rents Always Increase: While having a mortgage locks in your payment, renting does not have the same guarantee. Rents historically have been increasing and continue to increase.
- Homeownership: Beyond the financial benefits of owning Real Estate, there are the personal benefits. Owning your own home provides a sense of security, pride, and fulfillment. There is nothing like pulling into your own driveway, and having a place to call home.