Have you been involved in any sort of investing? Regardless of whether the answer is Yes or No, you must know the two qualities that set out the best investments in any field or any market: 1) high profitability and 2) low risk. Any and every investor looks for opportunities that will make lots of money while being relatively stable and reliable. So, if you are looking for some investment opportunities, you’ve come to the right place because real estate investing is actually among the most profitable low risk investments you’ll ever find. Wondering why real estate properties are such great low risk investments? Keep reading.
Related: Why Real Estate Investing Is the Safest Investment Option
Following are the most important factors which make real estate properties the best low risk investments in the US and beyond:
1. Real estate properties are tangible assets
What that means to say is that unlike other types of investments, real estate investments are actual properties, they are something which exists in reality. And exactly this feature makes them very low risk investments. What is one of the main risks associated with owning and managing rental properties, the most popular type of real estate investments? Definitely it’s not being able to find tenants and suffering from constant vacancy, which basically means that you will be making no rental income and having negative cash flow (as expenses will still be running). Well, even in this case, you still have options as a real estate investor. For example, you could lower your rent or try a different rental strategy (such as Airbnb instead of traditional). Worse comes to worst, you can always sell your investment property and buy another one in a different location. Because real estate properties are tangible assets, they are very low risk investments. You always have various options to go about them instead of just losing all the money you’ve put into buying a rental property, fixing it, maintaining it, and managing it.
2. Real estate properties can produce monthly rental income
If we are not so pessimistic about our rental property, we can assume that we will be able to rent it out on regular basis for a decent rental rate – regardless of whether traditional or Airbnb. Then we – as real estate investors and as landlords – will be making monthly (or daily in the case of Airbnb) rental income, which is what differentiates real estate from all other investment options. If you invest in stocks, for example, you don’t receive monthly rental income, and there is no way to know on regular basis how your investment is doing until it’s time to receive dividends or to sell your stocks. With real estate investing, you don’t have to wait until the day you decide to sell your rental property in order to know whether your investment has been successful or not; you will know it from month one. And that’s why rental properties are such low risk investments. You know immediately if things are going well with your investment, and you have the opportunity to retune your investment and rental strategy if needed.
3. Real estate properties appreciate in value
In addition to making rental income, a real estate investor will also benefit from major profits once he/she decides to sell the investment property. Most real estate markets across the US – especially the urban ones – are getting quite clustered; space is limited, which means that soon there won’t be a chance to build new buildings. So, real estate is more or less bound to increase in value over time, regardless of the location and the type of property. Well, that’s what we call low risk investments, no? It’s virtually impossible to say that the value of any particular stock is definitely going up at any point in time. So, if you are looking for low risk investments which still can bring you major profit, go for real estate. Real estate appreciation will bring you all this.
Related: 6 Things to Know About Real Estate Appreciation
4. Real estate properties are built on land
Speaking of appreciation, it is a fact that all real estate properties have been built on some land, even if it is just an apartment or a condo. In any case, when you buy a real estate property, you also buy some area of land or at least the right to use it. Well, land is probably the most limited natural resource there is, and also one of the most important ones – we will always need a place to live and work. All that means to say that investment properties are set to go through significant appreciation over time because of the imminent increase in the price of land on which they are built. And once again – this fact makes them excellent low risk investments.
Related: How Important Is the Market Value of Land in Real Estate Investing?
5. Real estate properties are insured
Previously we said that probably the worst thing that can happen to your rental property is not being able to attract tenants. Well, maybe that was a slight overstatement. The worst thing that could happen to your investment property must be for it to get destroyed – by terrible tenants, by a natural disaster, or by any other human- or non-human inflicted calamity. Actually, even that’s not so bad. If you own a rental property, you are definitely insuring this property. While the insurance for rental properties costs more than for homes, it also covers more. So if anything happens to your investment property, you will be largely repaid for it. That’s why real estate properties are such low risk investments.
While there are numberless investment opportunities out there, we are all looking for the best ones, and best investments are profit-making and low-risk. Real estate properties emerge as the top low risk investments an investor could possibly find. As long as you manage them well and market them smartly, you are bound to make money from them in the short and long run. It’s just hard to lose a real estate property altogether as long as you don’t act stupid.
Once you are ready to enter the exciting world of real estate investing for some money-making low risk investments, check out Mashvisor for the best investment properties across the US.
