Why Real Estate Makes Sense In A Turbulent Economy
May 17, 2023
Large numbers of investors, individual savers, and institutions are putting their money into real estate as the economy continues to become more unpredictable. Recent bank collapses, rampant inflation, widespread unemployment, rising crime rates, and a roller-coaster stock market are just a few of the factors that are driving people to the security and financial solidity of real estate. Why is real estate a wise investment choice in troubled times?
Not only does it represent a hard asset, but the sector offers numerous ways for diligent, hardworking people to earn a living. Some choose to purchase homes, perform repairs, and then put them back on the market at a higher price. Because stocks and bonds are paper assets, real estate can serve as a reliable, income-producing alternative during inflationary times. Not only is it an appropriate addition to long-term portfolios, but the niche comes with a very low cost of entry for those who choose to purchase fractional shares. Review the following points to learn more.
Flipping Can Provide Full-Time Income
In any kind of housing market, brisk or slow, flippers can earn a solid income by purchasing fixer uppers and putting them back on the market once repairs are made. Some flippers do the work themselves, but most hire local contractors with whom they develop close working relationships. The secret of a successful flip is to resell for an amount that more than covers your purchase price and the cost of repairs.
It’s Not A Paper Asset
Unlike so many other kinds of assets in the modern marketplace, real estate is a tangible commodity. It’s not based on paper, as is the case with stocks, bonds, and derivatives. Even bank accounts where you hold checking and savings balances are only as safe as their FDIC coverage limits, which vary among institutions and account types. While it’s true that the Federal Deposit Insurance Corporation insures deposits up to certain limits, the recent SVB (Silicon Valley Bank) collapse in March highlighted how essential it is for investors to avoid some kinds of paper-backed assets.
If you’re among the millions of concerned consumers and investors who have been shaken by the recent collapses in the banking industry, you should educate yourself about how the FDIC works by reviewing an informative guide on the topic. It’s essential to understand how the entity secures account holders’ deposits and what the insurance limits are on different types of accounts. Likewise, it helps to know about the process of modern bank failures and how the FDIC intervenes to protect depositors’ interests.
Real Estate Is The Ideal Long-Term Portfolio Addition
Things like trusts can safeguard personal wealth but real estate is a great way to not only diversify portfolios but add assets that offer excellent long-term appreciation potential. Raw land or land that includes a built structure tends to perform well over the long haul, even compared to the stock market. Plus, most working adults own investment portfolios that are weighted down with paper assets like stocks and bonds. Property is a tangible asset that automatically brings diversification to the average person’s holdings. The beauty of the move is that fractional shares and REITs (real estate investment trusts) offer a low-cost way to enter the marketplace.
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