For nearly a decade, many Americans have felt real estate is the best long-term investment. Single-family homes, condos, townhouses, multi-faimily homes, ADUs (accessory dwelling units) or vacant land are all options to consider if you decide to invest.
Benefits of Investing in Real Estate
- Extra Income- After your monthly expenses are decucted from the rental payment, there may be additional income left.
- Portfolio Diversification- Adding real estate to a portfolio of diversified assets can lower portfolio volatility and provide a higher return per unit of risk. It is also not affected by fluctuations in the stock market.
- Leverage Funds- Real estate investments can be financed through mortgages and other financing options, allowing you to leverage your captial and amplify returns.
- Equity and Appreciation- Real estate properties tend to appreciate in value over time, allowing investors to build equity and accumulate wealth.
- Hedge Against Inflation- Real estate historically keeps pace with inflation.
- Tax Incentives- You may be eligible for certain tax breaks and deductions.
3 Terms to Know
- Fair Market Value (FMV)- The price that a willing buyer would pay a willing seller for a home in an open market. The FMV is agreed upon by both parties who are knowledgeable about the property.
- Investment Value- The amount an investor is willing to pay to obtain an asset or investment. It is based on their subjective goals, criteria and opinions about the asset.
- Return On Investment (ROI)- Measure the profit you have made (or could make if you were to sell) on an investment. It is calculated by comparing the amount you have invested in the property, including the initial purchase price plus any further costs, to its current value.
We know the market can be confusing, but we are here to offer clear, concise information you can trust. Feel free to contact our office today and we will answer any questions you may have.
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