Is Real Estate a Good Investment? Why Is The Return On Rentals Typically More Stable Than Stock Market Investments?
When examining the return on rentals of your properties, you may notice that they are typically more stable than stock market investments. Why is this? Is real estate a good investment?
Investors love making money. After all, that is what investing is all about, isn’t it? But, as you know, there are many ways to go about it. Some investors find a great return on rentals. Others seem to love the thrill that comes with investing in stocks – and taking that risk that can lead to huge earnings. Some find that one of the many other types of investments is the best route.
Truth is, investing is a personal choice. As an investor, you get a feel for what works well for you – and you stick with it. But, if you are interested in branching out and wonder whether or not real estate investment may be something you want to dabble in, let’s talk about it.
Types of Real Estate Investments
There are many different types of real estate investments – and different ways to go about getting involved. But when it comes down to investing, you have a choice of vacant land, commercial, and residential property.
Many investors look toward real estate for a quick profit by flipping the property. This involves purchasing a home that needs a little work and giving it a makeover so you can turn around and sell it for a higher price. The problem here is that not all investors are crafty carpenters or contractors. You’d have to have some serious connections and a deep understanding of the value in order to know whether an investment is worth it or not – or whether you’d even make much of a profit once you put money into the property.
Rentals are another type of property investment that seems to be a great way to earn a passive income. Investors find properties in neighborhoods where rentals are sought – and they purchase them and rent them out to tenants. Whether they are purchased for a cash price or financed will determine just how great the return on rentals are.
The Dangers of Stocks
There have been many investors over the decades who have made a ton of money with stock investments. Time spent analyzing data and reviewing trends and history can lead to big wins. But just as fast as those gains come, losses can come, too. In fact, losses or very small gains are much more common than big wins.
Stock market investing can be risky. If you don’t mind the risk then go for it – you may find yourself with big returns using this method. Just know that things may very easily go the other way.
The Stability of Real Estate Investments
Earning and keeping money is a skill. If you are looking for more stability – and less risk – then you may want to ditch the stock market and look toward real estate investment.
These long-term investments allow you the opportunity to have more control. You can add value, make your property look more attractive, perform upgrades that increase market value, all with the idea of making a bigger return on rentals. Or, you can rent out the property for years, consistently making an income. If you have more than one rental property, you have several steady streams of income.
While real estate investing does have some risks, they are nothing when compared to stock market investment.
So, Is Real Estate a Good Investment?
The answer is yes. If you are an investor who is looking for a less-risky, more stable investment option, then real estate investments may be a great option. Plus, there are plenty of tax benefits that are a bonus for investors. These include tax deductions such as interest on the mortgage, depreciation deduction, insurance premiums, property taxes, repairs, and so forth.
Real estate investing provides you with:
- A tangible, insurable asset.
- The ability to transfer property.
- No special knowledge (such as that required for investing in the stock market)
Real estate investment is predictable and profitable. And who knows, you may find that you actually enjoy finding homes for others to reside in – giving tenants a place to call home.
It is important to keep in mind that real estate investing, although it has its perks, is not for everyone. As a professional, you will have to decide which is the best type of investment for you – and run with it.
Real Estate Investments with a Property Manager
The downfall of real estate investment is being a landlord. If you are an investor then there is a good chance that maintaining properties and dealing with finding good tenants is not your forte. The good news is that you can hire someone to be on your side and take care of this for you – while you do what you do best.
Hire an experienced property manager to handle all aspects of your rental property and can help increase your return on rentals. Property managers offer all types of services:
- Marketing your property across all types of platforms to find the best tenants.
- Thorough tenant screening for high-quality tenants.
- Rent collection and invoicing.
- Handling all repairs to the property, whether emergency repairs or routine maintenance.
- Property inspections, such as move-in and move-out inspections as well as routine inspections to ensure the safety of your investment.
- Monthly financial reporting that keeps you apprised of your earnings and expenses.
- Evictions, if necessary, will be handled – throughout the entire legal process. (Though with a thorough screening process, this isn’t usually necessary).
Finally, experienced property managers are up to date on their knowledge of fair housing laws and such that are at the local, state, and national level – which means you reduce your risk of finding yourself in legal trouble.
Choosing the right property manager, such as Real Property Management Evolve in Phoenix, means you have someone who will keep the lines of communication open with you thanks to powerful technology while also acting as a trusted ally in your investment adventures. You are an investor looking for opportunities to make money. If you find it in stocks, then wonderful. If you find it in real estate rentals, even better. We’re here for you.