REASON #9 - Real Estate is a Tangible Physical Good & Asset
What does that mean? Real estate is not some cerebral investment that is traded by the click of a button on an online brokerage. With real estate, you can hop into your car, drive to your property, walk around, inspect the buildings, and question your staff. Because of this, is is not subject to the volatility of stocks and bonds, or other investments.
With other types of investments, change can happen fast. We all saw this in the 2008 banking melt-down, when the majority of American's lost their investments on paper, right before their very eyes. When it comes to stocks, you are basically at the mercy of the company's public relations department. Which means, you have to just sit back and wait for them to publish their earnings. If the company had a poor quarter, then your stock will typically drop fast with little or no warning. All you can do at that point, is react, but this usually doesn't happen without losing a substantial sum first.
With real estate, it's different. While real estate can still have it's ups and downs, real estate for the most part is slower to react to sudden changes. If you are paying attention and know what to look for, you can see market trends way before they happen, and this allows you time to react or formulate a plan to either cut-back, sell or exchange. Maximizing your return on investment, or your cash-on-cash return, is essentially the key.
Additionally, real estate is not as liquid as other investments. That means that it is not a quick buy-and-sell transaction like stock. When you sell liquid investments, you earn cash quickly, therefore you are taxed at a very high capital gains rate. With real estate, gains are realized at a much slower rate, which makes your tax exposure significantly less, compared to other investments.
What does that mean? Real estate is not some cerebral investment that is traded by the click of a button on an online brokerage. With real estate, you can hop into your car, drive to your property, walk around, inspect the buildings, and question your staff. Because of this, is is not subject to the volatility of stocks and bonds, or other investments.
With other types of investments, change can happen fast. We all saw this in the 2008 banking melt-down, when the majority of American's lost their investments on paper, right before their very eyes. When it comes to stocks, you are basically at the mercy of the company's public relations department. Which means, you have to just sit back and wait for them to publish their earnings. If the company had a poor quarter, then your stock will typically drop fast with little or no warning. All you can do at that point, is react, but this usually doesn't happen without losing a substantial sum first.
With real estate, it's different. While real estate can still have it's ups and downs, real estate for the most part is slower to react to sudden changes. If you are paying attention and know what to look for, you can see market trends way before they happen, and this allows you time to react or formulate a plan to either cut-back, sell or exchange. Maximizing your return on investment, or your cash-on-cash return, is essentially the key.
Additionally, real estate is not as liquid as other investments. That means that it is not a quick buy-and-sell transaction like stock. When you sell liquid investments, you earn cash quickly, therefore you are taxed at a very high capital gains rate. With real estate, gains are realized at a much slower rate, which makes your tax exposure significantly less, compared to other investments.
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