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  • Writer's pictureMay

Why You Should Invest in Real Estate

Unsure of whether investing in real estate is a good idea? Read on for the list of benefits of investing in real estate property.

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+ Why should you invest in real estate?

+ What options are there for investing in real estate?

Why should you invest in real estate?

The simple answer: diversification. When you think about growing your wealth, you shouldn't really put all of your eggs in one basket (well, you can, but you'll either score very big or you'll completely implode). It's too much risk. Diversifying will allow you to maximize your returns, while limiting your potential downsides. Unlike investing in the stock market, real estate tends to be a pretty stable asset. The only time we really experienced a housing bubble was the 2008 housing crash, which will more than likely not happen again. Why? What drove the 2008 housing bubble was the fact that people with low credit scores and who had a higher risk of defaulting on loans were getting approved for loans they traditionally should be rejected for. There are stricter rules and regulations in place now to prevent something like the 2008 housing crisis from happening again.

Another big positive is the ability to build equity (which directly grows your wealth). The benefit of building equity is that you are able to leverage it in the future to get another property. This is typically how one person can turn one investment property into several investment properties with just one down payment (more on this at a later date). If you haven't already, read up on Rich Dad, Poor Dad as the author talks a lot about real estate investing in his book (it's also one of my top 3 personal finance books to read).

What options are there for investing in real estate?

There are three main options for investing in real estate.