With the US economy now showing impressive growth, you must be thinking about the best ways to invest your money for good returns. There are plenty of investment strategies in the US, including residential real estate properties, so which one should you go for?
Indeed, real estate is not only a good investment but actually one of the best things to invest in. Wondering why? Read through this article to figure out what reasons make real estate investing a top choice among the numerous ways to invest money.
5 Reasons Why Real Estate Is a Good Investment ALWAYS
Before we dive into the specific US housing market predictions that make real estate stand out among other investment options, let’s have a quick look at the general advantages of this strategy. Taking all these factors into consideration, the answer to the question “Is real estate a good investment in general?” is YES, YES, and YES.
1. Good Investments Are Low Risk
While any investment holds a certain degree of risk, the best investments to make money tend to be relatively low risk, at least relative to the rate of return that they offer. This is exactly the case with investing in rental properties. As real estate properties are tangible assets, it is virtually impossible to just lose everything as a property investor, while the same cannot be said about stock investments.
Even if the overall US housing market or the local real estate market goes through a recession again, it is bound to recover. People will always need a place to live, no matter what, so real estate demand is guaranteed to be there and real estate investing is one way to go. The fact that real estate is a low risk strategy makes it a good investment at any time.
2. The Best Investments Provide a Hedge Against Inflation
The reason why so many people in the US and elsewhere wonder where to invest their money is to protect it against inflation; otherwise, they would keep it in the bank where it’s quite safe. Investing in real estate, actually, is a hedge against inflation.
The value of properties in any real estate market rises over time, and this is known as natural appreciation. The main driver behind this phenomenon is the fact that the land on which real estate properties are built is a limited resource, coupled with the ever-increasing population, which puts more and more pressure on the demand for housing.
Indeed, the average annual rate of real estate appreciation has exceeded the average annual inflation rate in the US housing market in the past decade, and this trend is expected to continue over the next few years.
3. Investing for Income Is Important
The best way to invest should provide investors with money not only in the long term but also in the short term. Rental real estate properties allow a real estate investor to start making money right away. Once he/she is done buying a rental property, this property can be rented out immediately to start generating monthly rental income and return on investment. That’s why investment properties are frequently referred to as income properties.
With the real estate investing strategy, you don’t have to wait for years for your assets to appreciate and capitalize. Moreover, you can choose how to make money in real estate for the maximum return: with a traditional rental property or an Airbnb investment property.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
4. Making Money in the Long Term Is Also Important
Wondering where to invest money to get good returns in the long run? The answer is REAL ESTATE once again. As mentioned above, real estate appreciation happens naturally, without any efforts on behalf of the investor. This means that with residential investment properties, you can make a lot of money passively once you decide to sell your house. Now, if that’s not a good investment, what is?!
5. Real Estate Investing for Beginners Is a Viable Option
Many of the best investments are difficult to get started in as they require extensive knowledge and understanding of the market. Moreover, many of them necessitate full-time devotion in order to generate the best return on investment. This is definitely not true about real estate.
First of all, you don’t need any specific degree if you are thinking about how to get into real estate investing. All the knowledge and real estate data that you need is available online. A good resource to begin with is Mashvisor’s blog, where you will find thousands of articles ranging from how to get started in real estate to the best places to invest in real estate. You can also try reading real estate investing books to fill up the gaps in your knowledge.
Second, buying rental property with a good cap rate and cash on cash return does not involve detailed expertise or manual real estate market analysis and investment property analysis anymore. The best real estate investment tools allow investors to find a profitable income property for sale in a matter of minutes.
Third, to invest in real estate, you don’t need to leave your 9-to-5 job. With the help of software tools and professional property management, you can make passive real estate investments on a part-time basis.
So, you can see why real estate investing is good in general. With the right strategy and the best property location, you can expect good returns, at least.
Related: How to Start a Real Estate Business: A 10-Step Guide
4 Reasons Why Real Estate Property Investments Are Good
To figure out the answer to the question “Is real estate a good investment?“, we need to consider the upcoming trends in the US housing market. Here are the most important factors which both experienced and beginner real estate investors should keep in mind:
1. Real Estate Prices Will Continue Going Up
Speculations that the recovery in the US real estate market might not happen or might be weaker than expected are just that – pure speculations. There are no major signs to show that this will be the case. On the contrary, the vast majority of real estate experts expect the values of homes for sale in the US housing market to continue increasing, albeit at a lower rate.
If you are wondering whether investing in a rental property for sale is worth it, rest assured that it is. The slowdown in the rate of real estate appreciation is actually a good thing as it will prevent another housing bubble from happening any time in the near future. Moreover, only a small decrease in the appreciation rate is expected, while real estate prices will actually continue rising faster than the inflation rate.
2. Lack of Affordability Is Not a Defining Factor
Many real estate experts, including real estate investors, are increasingly worried about the growing lack of affordability in the US housing market. However, this is not a constraining issue in the overall market but rather an isolated problem in certain markets.
It is absolutely true that buying an investment property in locations such as the San Francisco real estate market, the Los Angeles real estate market, and the New York real estate market is challenging, especially for those just getting into real estate, but other places like the Dallas real estate market and the Phoenix real estate market offer more affordable real estate listings.
With the right tools, including Mashvisor’s investment property calculator and Property Finder, new investors can easily get into real estate investing and find income properties at reasonable prices with a good cap rate and good cash on cash return. All in all, buying cheap properties is still a viable possibility in many locations, which is one of the reasons that make real estate a good investment strategy.
3. Interest Rates Are Expected to Remain Low
Experts predict that interest rates will continue being relatively low at around 4%, which means that those who wonder how to invest in real estate due to insufficient cash capital can resort to a mortgage. The fact that you don’t have to use only cash makes buying a rental property one of the best investment strategies out there.
Buying an investment property all in cash is hard even for experienced real estate investors, not to mention beginners. However, you should not worry about how to make money from real estate investing if you don’t have enough cash, as financing a property with a mortgage will be an affordable option. The expected low interest rates are one more reason why now is a good time to become a real estate investor.
4. The US Housing Market Is Transforming
The US real estate market has been a seller’s market for a few years now. While a sudden change to a buyer’s market is not expected to take place soon, the slow transition to this direction is projected to continue. The stabilizing inventory, the slowdown in appreciation, and the low mortgage interest rates are all pointing to this real estate trend. These will be a very important positive factor, especially for beginner real estate investors, who will not need to enter into bidding wars and compete with homebuyers and more experienced property investors.
Meanwhile, if you are interested in locations that are expected to be definite buyer’s markets, have a look at the Nashville real estate market and the Atlanta real estate market.
Related: Is It a Buyer’s or Seller’s Market in Real Estate? How to Tell the Difference
So, is real estate a good investment? Yes, and definitely yes. Real estate properties continue to head the list of the top investment strategies as they allow investors to make money in both the short term and the long term while keeping their full-time job. In order to be successful, make sure to learn how to start investing in real estate.
As a newcomer to real estate investing, just remember to start small – with a single family home or a duplex – and consider hiring a rental property manager to avoid stress and to enjoy your rental income. To start looking for the top-performing investment properties in the US now, sign up for a 7-day free trial of Mashvisor with a 15% discount afterward.