5 reasons why now is the best time to invest in real estate

There is never a better time to invest in real estate

Have you ever heard the saying that, “Saving doesn’t make you rich but investing does”

I like to make that quote specific by saying ‘…investing in valuable assets does’

I have never really been one to like too many details or moving parts (they scare me) I used to not be so much of a fan for investing in stocks and money markets. Now I know a lot of people who have made money in those assets but there is always the repeated warning that portfolio diversification is important, and my niche is real estate.

There are so many statements and assurances out there about how real estate works to create millionaires and all of that but if you are seeing those statements, you will wonder why and how these can be true.

So today, I am going to answer the question of WHY REAL ESTATE?

Just as with all viable assets as exist, getting into real estate should have a true goal behind it; and not one as basic as I want to be rich but with a little detail like

‘I want to be rich enough to (insert a secondary goal).

Doing this will help you do the groundwork right, stay the course when things get tough and possibly find the ways to diversify if and when the need arises.

Here are 5 reasons why you should put your money in real estate

1. GUARANTEED APPRECIATION

Appreciation/capital appreciation, also known as capital value appreciation, is an increase in the price or value of an asset. Appreciation occurs when the market value of an asset is higher than the price an investor paid for that asset. It can refer to an increase in the value of real estate, stocks, bonds, or any other class of investable asset.

If you invest in property, be it land or house, the assumption is that it will appreciate over time, and with real estate, we are not talking in little thousands but leaps of thousands as fractions of its initial worth would be valued at.

Yes, it’s true that everything else in the economy, is governed by forces of demand and supply but being an essential commodity, it’s a must-have resource that everyone needs and uses. The most common way that investors make money from real estate is rental/lease incomes, but there are more options to explore – especially when you think out of the box.

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2. CASH FLOW: Nothing that has a higher cost value remains the same in its price to access, i.e rental value and neither does this happen with real estate. Smart investors use real estate to gain cash flow whilst the value of their funds appreciate. Cash flow from real estate can come in form of rental incomes, commission shares, dividends, or profit shares and all of these would increase, not decrease with inflation.

3. IT DEFIES INFLATION: There is a relationship between GDP growth and real estate demands. The truth is that as long as an economy grows daily, there’ll always be a higher demand for real estate (remember the supply and demand mentioned in point 1?). The best beneficiaries of this investment are the early adopters – those who had bought at the lowest price possible and can now use their assets when the prices are higher, which is why now is the best time to invest in real estate.

As a result of this, the buying power for real estate will always continue to increase in relation to capital, which will be achieved by effecting the increase on tenants.

“Over time, the growth in GDP causes inflation—inflation, if left unchecked, runs the risk of morphing into hyperinflation. Most economists today agree that a small amount of inflation, about 1% to 2% a year, is more beneficial than detrimental to the economy.”

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4. BUILDING EQUITY: In mortgage related transactions, there is always a demand for the applicant to own equity in the property of up to 20%. With non-mortgage transactions, the understanding is that the investor owns 100% of the equity because it was fully paid for.

Owning equity in property means that you are also invested in the community you are resident in.

It also means that your net worth has appreciated higher than for someone who is not invested in property – this is a part of where the wealth status comes into play.

Don’t own flashy items but own equity in wealth generating assets? You are rich/wealthy and no one needs to know except that you are financially independent

5. PERFECT RETIREMENT PLAN: Knowing that we will all grow old and need to retire, the zeal to accumulate funds that will cater to us in that age is paramount. The thought of having a means of income or better still, multiple means of income after retirement is a pleasant thought that puts one’s mind at rest. Real Estate is an avenue that helps bring such thoughts to reality; and it can be leveraged as a retirement plan since cash flow is consistent as long as the asset is in your portfolio.

Some investors also do this with the aim of moving into a smaller home they own as a retirement plan. Owning the asset from earlier in life allows you to literally live rent free and even on the income that it had created for you over the years.

Investing in real estate alone is not the path or key to creating wealth but it is a sure way of doing so. How wealthy you will or can become then becomes a function of how creative you can get with reinvesting and divesting the funds generated to make more wealth.

So there you have it. 5 reasons why investing in real estate can make you wealthy and financially independent.

Have questions or comments, share them below – we love to hear back from you!!