Ten Reasons I like Real Estate as an investment.
1. First of all I like to put my money into something I understand. I understand real estate. At least I think I do, and that’s what matters. I don’t understand a share of stock, much less a derivative, and I still can’t figure out really what an annuity is. But I have been living in some sort of real estate since I was born and I think I have figured out what it is by now. It’s REAL. It says so right in its name. I don’t have to explain at a cocktail party what real estate is – and I have never met someone that needs to be told what it is.
2. I have some sort of control of my real estate investment. I probably have a lot less control than I think I do, but the control I do have makes me, well, happy. I’m not at the whim of some investment advisor, financial guru, or daily market pundit.
3. I can drive by it and takes its picture. I can go in it and smell it. Heck, I can even feel its personality. I can be proud of it or ashamed. I can pull up a picture on my iPhone and show someone what it is. (I did this last night).
4. I can improve it physically. Update the appliances, put in a new kitchen, a pool, or lawn. And when I do these things I can convince myself I am making an additional investment, not just throwing my money away. I can also improve the investment with sweat equity, something that I love to do. Try that with a stock. A little TLC on a rental property goes a long way in improving its value. The value of a well maintained home versus one that was let go is demonstrably different.
5. I can leverage real estate. Yes, yes, I know you can buy stocks on margin, but the loan on my real estate is not going to be called because the value is set daily in the Wall Street Journal. Leverage on real estate is a wonderful thing. It increases my buying power and the returns on my income property.
6. I can improve if financially. I can restructure my debt by refinancing, lowering my carrying cost; and I can lower my insurance costs with some physical changes. I can even speed up my payoff and improve my equity position. If I improve its value physically, I can use greater financial leverage as well.
7. It makes me proud. Pride of ownership is a big selling factor in real estate. That’s why curb appeal is so important.
8. I little but of knowledge gives me an advantage. I am an insider in the real estate market. On every other investment I am an outsider.
9. I can borrow money on my real estate and borrowed money is tax free.
10. To date the government wants me to own real estate and gives me other tax advantages to do so. From capitals gains treatment to tax deductions.