Popularity
Real estate remains a top investment choice among Americans. According to a Gallup poll, 34% of Americans preferred real estate as the top choice for the best long term investments, with 26 % favoring stocks, and 18% favoring gold. Not even a decade ago, the US real estate market was in crisis, with thousands of homes for foreclosure, causing real estate investors to panic. With real estate prices plummeting, it was a buyer’s market. However, 2017 has been a positive year for real estate, with prices appreciating, turning into a seller’s market. This has convinced investors who are interested in the best long term investments to turn to real estate.
In theory, it is difficult to find real estate investments that depreciate over time. Yes, there are times when the housing market fluctuates, and there will be times that real estate investments are not the top investment choice. However, if you are considering the best long term investments right now, real estate is the way to go because you are almost guaranteed appreciation over the long term.
Investing in Land
When most people think of investing in real estate, the first thing that comes to mind is an actual physical property in the form of a single family home, a multi family home, or even a condo. However, investing in an actual land property is also considered one of the best long term investments. Land can be used to build any type of real estate property including commercial properties, residential properties, and even industrial properties. There are so many options available when you decide to invest in land, and the rewards and benefits are long term. Because the land belongs to you, you are given control over what type of real estate you would like to build on the property. Or, if you decide to keep the land for the future, the price will always appreciate, and never depreciate.
Related: 6 Reasons to Buy Land as a Real Estate Investment Strategy
REIT
REITs, or Real Estate Investment Trusts, are companies that own or finance income-producing real estate. These provide investors with a diverse income and long term appreciation. An REIT is comparable to a mutual fund, and allows investors to obtain ownership of some real estate ventures which include apartment complexes, industrial properties, and commercial properties. According to Investopedia, all REITs must have at least 100 shareholders, no five of whom can hold more than 50% of the shares among themselves. At least 75 % of a REIT’s assets must be invested in real estate, and 75 % of the gross income must be derived from real estate. If you are a more experienced real estate investor, and are looking for something different in the real estate market, REITs are a perfect investment, allowing you to have a make money in real estate from the best long term investments.
Related: What is a Real Estate Investment Trust? (REIT)
High Annual Return
Depending on the real estate property type that you invest in, return on investment rates vary. For example, an average 20-year return in commercial real estate runs around 9.5%, while residential and diversified real estate investments average around 10.6 %. Rest assured, making the decision to invest in real estate as a long term investment is an excellent decision. Let’s say you decide to purchase a single family home that is set at $250,000. How will this fare 20 years from now? The price of the real estate you invested in will appreciate. Of course, this isn’t always the case. If you did your research before deciding to invest in this home, and have chosen an excellent location, then your investment will only appreciate, especially if you are looking for the best long term investments.
The return on investment (ROI) is an important calculation that measures the gain or loss of a real estate investment, relative to the amount that was actually invested into the real estate property. It is important to have an idea of how to calculate the ROI before considering on investing in any real estate property, which will give you the optimal return on your investment.
Related: Understanding Return on Real Estate Investment
Diversity
The good thing about real estate investments is that they are so diverse. You are provided with many different options, ranging from condos on the beach in Miami, to single family homes in Seattle, and even multi family homes in Chicago. You have the option of buying a plot of land and building any kind of real estate property that you desire. You can choose to invest in traditional real estate, or choose commercial real estate, and choose to use your property as a rental property. A real estate investment isn’t black and white like other long term investments. The diversity of real estate investments makes them desirable to real estate investors as well as making them the best long term investments.
Real estate has continued to be the choice for the best long term investments in the US. These are the best long term investments due to their diversity, which includes investing in land and through different strategies such as REITs. The benefits of investing in real estate also include high annual return on investment rates, which provide real estate investors with positive cash flow. On your way to selecting the best long term investments for you, Mashvisor offers you hundreds of listings that will help you in your choice of an investment property in any part of the US.