Why You Should Be Investing In Real Estate
90%
The percentage of the world’s millionaires that attribute their wealth to real estate investing.
Intro
This guide explains why real estate investing should be part of every person's investment portfolio.
It is organized into an 7-part series each covering a component to real estate investing where we can dig deep into the topic. Note: this guide will primarily be covering single-family real estate as a property owner.
This first page will introduce the benefits and structures that exist within real estate investing that will develop as you read the rest of this guide.
Who Should Read This
This material applies to both early-stage and intermediate real estate investors as it will cover the basics with advanced tactics.
We'll be covering topics from the benefits and advantages to real estate including the wide variety of options you have as an investor.
Benefits of Investing in Real Estate and How You Can Earn Money From Real Estate
Real estate offers many benefits from consistent cash flow, long term gain potential through appreciation, and the ability to reduce risk through diversification. Moreover, most of the world's millionaires have been created through real estate investments. Historically, those who have invested in real estate tend to outperform those who do not (source).
Cash flow is arguably the most attractive parts of real estate investments that is collected through rental payments or interest payments. Moreover, real estate has historically and consistently trended upward in appreciation with residential real estate increasing in value over 36% since 2008 (source). And finally, adding real estate can decrease market risk as there is a lower correlation with stock market trends providing more stable and reliable income and growth.
This chapter will focus on each benefit separately to breakdown exactly why you should add real estate into your portfolio.
Chapter 1: Benefits of Investing in Real Estate →
Why Not Stocks and Bonds?
Stocks and bonds versus real estate is not a black and white picture. One complements the other and having both in your portfolio will help you build consistency in growth and volatility.
Since residential real estate is less correlated with the stock market, there are less broad movements across real estate portfolios. In fact, prior to the 2008 Great Recession, real estate sales prices have almost always trended positive year after year. And since 2008, values have risen to all time highs.
Moreover, as the economy grows, the demand for real estate drives up home prices. This allows real estate to act as an inflation hedge. In other words, real estate will protect your assets against inflation as it is expected to maintain or increase its value over time.
This chapter will focus on the a comparison between equities (like stocks) and the real estate investment market.
Chapter 2: Why Not Stocks and Bonds? →
Tax Advantages of Real Estate Investments
Tax savings on residential real estate investments can be complicated as there are a number of considerations.
As with all investments, you'll need to figure out how much taxes are owned and when they are taxed which will differ depending on a few factors from investment vehicle and income.
We suggest you work with a financial or tax adviser when navigating your options. But in this chapter, we will break down the primary tax advantages of owning rental real estate like mortgage interest deductions, property taxes, losses and depreciation, and other fees.
Chapter 3: Tax Advantages of Real Estate Investments →
How long do Real Estate Investments last?
Doorvest suggests that all people invest for the long term, and we're here for it.
Most successful real estate investors invest for over 30 years. The reason? After the 30 year period, investors will have paid off their mortgage loan and all rental income will be free and clear.
This chapter breaks down the considerations you should make when considering rental real estate as a long term investment.
Chapter 4: How Long do Real Estate Investments Last? →
Various Options to Invest In Real Estate
We believe rental real estate provides the best mixture of ease and profitability, but there are other ways to invest in real estate.
From the more active side, you can flip homes, wholesale, and of course, own rental properties. Active investments typically involve greater risk, but increases profitability and control.
From the more passive side, you can purchase Real Estate Investment Trusts (REITs), mutual funds, or private professional companies. Passive investments typically reduce profitability, but as typically safer and easier.
This chapter will discuss the various options you have to help you decide what the best option is for you.
Chapter 5: Various Options to Invest In Real Estate →
Recap & Cheat Sheet
This section will provide a bullet point list of the key topics covered in this guide.