In an age where it is rare to receive over a 0.1% interest rate on a standard savings account, people are looking elsewhere for ways to stash their hard-earned money. There are always standard treasury bills and online savings accounts that offer slightly higher interest rates than a traditional bank account, however the rates are still far lower than most investors hope to earn. This is where real estate investment comes into play: with higher return on investments than almost every other financial industry, real estate investment can be a lucrative field when done correctly. According to Investopedia, the annual average Return on Investment on a long-term (20 year) Residential investment property averaged 10.6%, while the S&P 500 averages approximately 8.6% per year. This means, on a $250,000 property, the average annual return is $26,500, $5,000 more than the same investment in an S&P 500 stock’s average. In addition to a higher return, real estate investment offers countless other unique benefits:
With rising prices comes rising home values, so when inflation occurs, unlike many other items in your portfolio, your investment actually becomes more valuable. While inflation often gives the general public less purchasing power, many real estate investors think of this as an opportunity for increased cash flow.
No mortgage payments
The rental income from your property that you receive should be enough to cover the mortgage on the property plus all of the expenses. This is one less burden to have on your hands, as your debt is being paid off and you do not have to do the work yourself.
You are in charge
This is one of the biggest benefits of real estate investment. In the case of stocks, while you might own shares, you most likely are not the one making important decisions regarding the future of the company; you have to hope someone else makes the right decision. On the other hand, when you own a rental property, you get to decide what renovations to make, when it is time to sell, etc., taking a lot of the stress out of investing.
Real estate investment offers an unbelievable opportunity to diversify your portfolio, as there are so many different ways to get involved. Whether you are a beginner or a savvy investor, there is no “right” way to make a profit in real estate, as no two projects or properties are the same. If you are interested in becoming a rental owner, or if you already are and want to own additional properties, contact us at (609) 800-FUND, or visit our rental page, to learn more about what is offered.