There are many reasons why investing in real estate is a smart move, and picking the right properties today can help keep your finances safe in turbulent economic times. Unlike volatile assets like stocks, commodities, or cryptocurrency, real estate tends to consistently increase in value over time. It can also be a predictable source of passive income through rentals, leasing, or business activity. Intelligent use of leveraging can also reduce your investment cost, and real estate investment properties can also serve as your collateral should you wish to take out a loan.
Real estate consistently increases in value
Real estate, especially in desirable areas, is a limited resource, and historically, this tends to increase in value over time. For example, a home value index for Wenatchee, WA, from 2012 to 2021 shows an increase in average home values from $199,000 in 2011 to $362,000 today. That’s nearly 82% appreciation over a 10-year time period. While recessions and other financial doldrums can hit real estate values, over time, the trend is up, up, up!
Real estate generates passive income
Real estate investments can also generate a valuable stream of passive income. A second home in a scenic tourist destination like Leavenworth, WA can be rented out to vacationers, and commercial properties can also generate consistent revenue from rental income and leases. Pick the right properties to invest in, and you can look forward to a steady income stream without having to spend as much of your time and energy monitoring a more high effort venture like a business.
Real estate generates equity
Real estate investments can also build up equity through a variety of means, whether through rapid repayment of mortgages, renovations, or improvements that you add to the property. Money spent on the property can add value, increasing your resale price as long as the place is well maintained.
Real estate can be leveraged
Perhaps the most important aspect of a real estate investment is leverage. Investors can borrow money from lenders to buy investment property. The idea is to enhance your returns by using other people’s money instead of your own capital.
As a tangible asset, real estate is also valuable collateral when you need to finance new investments – increasing your potential to invest in larger ventures down the line.
Perhaps the last intangible advantage of real estate as an investment is simplicity. In a world of increasingly complex investment models, cryptocurrency, and arcane financial instruments, real estate remains a comprehensible, tangible investment with relatively low barriers of entry for everyday investors seeking to make the most of their capital.
If you’re looking to make a smart real estate investment in the greater Wenatchee, Leavenworth, and Cashmere area, it pays to have a local real estate agent help you pick out the right property. Coldwell Banker Cascade Real Estate has an expert team of local agents who know the Wenatchee area and the Chelan and Douglas Counties like the back of their hands.