There are many reasons why real estate investments can be a lucrative alternative to stocks. For one, the stock market is highly unpredictable. Even though this volatility can sometimes produce hefty gains, the risks can be too high for many people.
If you are averse to the wild swings of the market, fret not. Luckily, there are much more reliable, lower-risk investments options available. Let’s look at why investing in real estate can be a great strategy for those seeking to reduce risks while reaping solid returns.
Resilience to Economic Turmoil
The stock market can experience dramatic highs and lows throughout the years based on current interest rates, government policies, economic trends, and investors’ beliefs. Real estate, on the other hand, has been historically much less susceptible to some of these factors.
Real estate is a tangible good and, for many investors, feels more “real.” With a stock, you are essentially buying a tiny piece of a particular company that you are otherwise unable to use. Conversely, real estate is an asset that can be utilized and controlled, with an added benefit of diversification.
There are numerous ways you can diversify your real estate investments from property types to location to investment strategies. Let’s drill down on some of these modes of investments.
- Property type: one of the most common ways of diversifying a portfolio is by property type. Some popular investment property types include single-family, duplex/triplex, condos, raw land, commercial, REITs, and large apartment buildings.
- Rental vs. Flipping: while flipping houses provides quicker returns on your investment, renting an investment property can provide passive income over a long period of time. Creating a mixed portfolio of rentals and fixer-uppers can be a smart strategy to protect against risks.
- Location: with so many up-and-coming neighborhoods and cities to choose from, real estate investors can hedge their bets and set themselves up for success by purchasing properties in multiple states, cities and areas of town. Consider attributes such as higher-than-average population growth rates, job growth rates, rental growth rates as well as low unemployment rates when deciding for a particular area.
Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!