Why Real Estate Builds Wealth More Consistently

I found an article titles  "Why Real Estate Builds Wealth More Consistently Than Other Asset Classes" from https://www.forbes.com/. That had some good data on why real estate is the best way to create wealth,

Cash flow is one of the big benefits and this article explains what the difference is.

"In the majority of investments (stocks, art, jewelry, bitcoin, etc.), you are hoping to buy something that will appreciate in value, then sell it later for a profit. In some forms of investing (buying a poorly run business, for example), you may be buying something that produces income and hoping to improve that asset's performance in order to increase its value. For most, this involves too much work and is undesirable. What we are left with is the subconscious understanding that to “invest” is to buy something you believe will be worth more later. If this is based on sound principles, it can work. If it’s not, it’s really more like gambling."

What they are saying is you control your real estate portfolio and no bad asset mangers that can run your asset into the ground. 

"That said, appreciation, or the rising of home prices over time, is how the majority of wealth is built in real estate. This is the “home run” you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change."

Cash flowing real estate that you buy today will go up in the future if the home is purchased in the right location. Bad areas usually stay that way because there are people who need that type of real estate. The chances of the bad areas going up are usually very slim! 

A lot of investors do not understand how important appreciation is for your overall wealth creation. Personally I have had $150,000 in appreciation on one of my homes when I sold it the check was nice. It was a 2 bedroom, but the location was very good. That is why it is so important to know where you are buying and the pricing trends in that area. 

"The key to using inflation to build wealth in real estate lies in the fact the majority of your big expenses (mortgage, property taxes) stay fixed for the majority of the time you own the property. When you combine this with rising rents and home values (due to inflation), you start to see big results. If we know it’s reasonable to expect inflation to continue, why not invest in an asset where this will benefit you"

You do have a lot of fixed cost on real estate. The cost of a mortgage (if you have one) is fixed in almost all cases. If you have a variable interest rate loan there are caps that make the mortgage only go up so much. 

As inflation goes up so does rents in a lot of cases. So that helps real estate during the inflation periods. 

There you have it real estate is worth it! Everyone needs a place to dwell in rather they purchase or lease it, also ABNB is another new way to creating income with real estate. Location is everything in making money renting your home nightly. 

Need Real Estate? Need Income Real Estate? Good income Real Estate? Call me 216-703-5740 I'm Brett Icon Agent EXP Realty In Az please call 602-363-6551 

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