For example, if you sell your house for $100,000 and buy another house for $100,000, you have not made money but rather have simply exchanged one asset (your old house) for another asset (a new house).
In contrast, when investors sell stocks they are always taking money out of the market and therefore weakening it.
8. Real Estate Typically Goes Up In Value Over Time
The value of real estate tends to go up over time due to inflation but also because people always need places to live or work.
Real estate prices are also influenced by supply and demand factors such as population growth (supply) versus jobs created (demand).
These factors may be affected by policies enacted by government officials who can influence interest rates which affect housing affordability for first-time home buyers.
For example, when interest rates are low it encourages more people to buy homes because they can afford them with less money down.
Changes in interest rates can also affect commercial real estate prices, which are typically based on the supply and demand of office space.
9. Demand For Real Estate Will Always Exist
It doesn’t matter whether the economy is good or bad, people will always need places to live and work.
Even during recessions, people still need places to live so they can save money by not having to pay rent and cut down on transportation expenses by having their own car instead of taking public transport or cabs everywhere they go.
In the end, a smart investor will likely choose real estate if they wish to be able to add significantly to their net worth over time.
The growth potential of real estate is incomparable to most other investments, and the cash flow can give investors a steady source of income for retirement.
Working with a good team of professionals will help new investors, or even experienced ones, navigate this complicated industry and land on sound financial footing. It’s important to understand that real estate is not a get rich quick scheme.
It takes time and effort to build a solid portfolio of properties; however, it can be very rewarding in the long run.
With the right team behind you, anyone can become a successful real estate investor over time.
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