14 Post No: Why Real Estate?

A few of the many advantages Real Estate can provide are:

1. Leverage
   Real Estate is a tangible asset which means obtaining financing is easy as compared to stocks or mutual funds. Adding leverage means that you can use only a small amount of your money to control a large investment. As an example, with a typical 25% down payment, you would benefit from 100% of the appreciation even though you've only invested 25% of your own money. This means that if the property value were to go up by 6%, your actual ROI (Return On Investment) would be 24% (not including any additional profit centers discussed below)
2. Cash Flow
   The rent received from tenants goes towards mortgage payments, utilities and taxes. Any leftover amount is referred to as cash flow. Real Estate investments can generate a continuous flow of cash on an ongoing basis. This cash flow is also known as passive income, which continually increases due to Principal Reduction and rising rents.
3. Principal Reduction
   A portion of each mortgage payment will reduce the principal owing on the mortgage until eventually (typically 25 years) the mortgage is paid off in full. This reduction in the principal amount is known as principal reduction. This means that even if the property were to never increase in value, it would eventually be paid off in full and the cash flow would continually increase due to lower expenses and rising rents. When the property is sold, the principal reduction gets converted to cash in your pocket.
4. Capital Appreciation
   This is described as the value of the investment increasing over time. By purchasing well-selected properties in the right area of the right town at the right time, the appreciation can be well above the market average while also greatly reducing your risks.
5. Wealth Creation & Preservation
   Real Estate is used by sophisticated investors to not only create wealth but also to preserve it. History has proven that over the long term properly selected Real Estate outperforms any other investment.
6. Hedge against Inflation
   Real Estate can be an excellent hedge against inflation. As inflation rates increase generally so do Real Estate values. Historically these increases not only match but are much higher than the inflation rate.
7. Freedom
   There are many types of freedom Real Estate can provide; financial freedom, freedom to travel and spend unlimited time with loved ones, freedom to do as you please. Regardless of the freedom you are seeking, Real Estate should be a part of every serious investor's portfolio.