Investing 101: Why Real Estate Makes More CENTS - FresYes! (2024)

Investing has been a hot topic recently! With all the buzz around crypto, bears and bulls, and the emergence of investing apps, the market has been on many minds. People are looking to make wise investments, maximize their income, and make good decisions for their future. With so much being said about the market, sometimes it can be hard to cut through the noise, but one investment strategy that remains solid is real estate investing. Here’s why investing in Fresno real estate makes more cents.

Tangible Assets

First and foremost, one thing that really sets real estate investing aside from many other investment strategies is that a residence or commercial property is a tangible asset. While some assets like a stock are intangible—meaning they’re not actually something you can hold—a tangible asset is a physical thing. Something you can theoretically touch.

The advantages of tangible assets are numerous; for one, they can be used to safely buffer the effects of inflation. Real estate and some other tangible assets hold the ability to outpace inflation. While buying power tends to go down over time due to inflation, the value of real estate tends to go up over time.

Not to mention, no matter what happens to the stock market, people will need homes to live in and buildings to work in. Another advantage of tangible assets is their usefulness. While a stock certificate can become almost worthless overnight if a company fails, real estate will never vanish into thin air.

Stability

Real Estate investment tends to offer unparalleled stability even in times of volatile stock markets. In general, real estate investing is a good long-term investment strategy. Since real estate is less liquid than stocks, it experiences a lower trading volume—and less ups and downs. After all, most people are not going to sell or buy a home or piece of commercial real estate in one day.

This is part of the reason stocks and cryptocurrency values are so volatile, from day to day. With few trading costs, investors can trade stocks and cryptocurrency digitally in the blink of an eye, and as such, people can engage in high-risk, short-term investing strategies like day trading. Day trading, and other similar practices are so high-risk, that the SEC heavily discourages people from engaging in them lightly.

By stark contrast, real estate trading requires a certain amount of planning and communication between two parties. Deals are much less likely to occur as frequently, and as such, the value of real estate seldom changes much in one day. Instead, real estate assets offer stability even in volatile markets.

Many Ways To Invest In Real Estate

There are many ways to invest in real estate. You can buy a home and use it while it increases in value, before eventually selling for a profit—this being a route many first-time homeowners take. You can also buy and rent out a home or commercial property and earn passive income while the property becomes more valuable over time. Ultimately selling it if you wish.

In any of these cases, you can leverage significant gains with little startup funds compared to the same gains from stock trading. With a mortgage, you can spend less than you might on rent every month, if you’re living in your property, or you can use rent income from tenants to keep up with mortgage payments if you’re renting. In both cases, you’re working with a tangible asset valued generally much higher than the down payment you’ll have to make.

Not all real estate investing involves direct involvement, however. If you want a more hands-off approach to making real estate investments, you might choose to invest in real estate investment trusts, or REITs, and let somebody else deal with day-to-day operations and maintenance while you collect dividends or sell for a return later.

Cash Flow

While certain assets only offer valuation over time, contingent on market forces, and sometimes dividends, real estate can offer something more robust—rent income. By renting property, you can make passive income on your holdings even as they increase in value over time.

While renting property does require work—particularly in maintenance, there are plenty of resources available to make it easier, from property management services to real estate services. Similarly, REITs tend to perform well and can yield cash flow through dividends. Though REITs can be traded quickly, their value is linked intrinsically to tangible assets, making them fairly stable.

Conclusion

Real estate investing makes cents! There is a lot changing in the markets today, but one thing remains true; real estate investments are a solid tool in a long-term strategy. While the market changes every day, people still need real estate for everything from living to working and entertainment. Investing in real estate is a great way to buffer volatile market changes and the rise of inflation, sometimes while even earning passive income on your holdings.