Rediscovering The Real Reasons We Should Invest In Real Estate
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Giant companies crumble, as do major asset classes. Yet real estate is still the mainstay of multigenerational wealth. Why?
A lot of individuals, corporations, and funds have veered away from real estate over the last few decades. Many are coming back. Some have always maintained a solid slice of real estate in their portfolios. Those are most often the most successful entities and families over multiple-generations.
As the markets rumble and turn again, it is worth pausing for a moment to consider why real estate investment is so important. The typical drivers of investment choices today include; the chase for high yields (rushing to correct exactly the same mistakes made in the last cycle), to be in the hot thing of the moment, bragging rights at dinner, or fear when those sectors go wrong. You can inject stocks, bonds, dotcoms, and cryptocurrencies here. It applies to all of them. All of these can be reasons to invest in real estate as well, but they are terrible ones. However there are some very basic and important reasons to invest in real estate.See why you should invest in commercial real estate through an asset management company in Canada:
It’s a tangible asset
Real estate is a hard asset. It’s not going anywhere. Companies and countries and even currencies can boom and bust, but the real estate is still there. It is safe and reliable in this respect.
Commercial real estate has huge income potential. Especially passive income. It really doesn’t matter how big your portfolio is on paper, if it isn’t returning real dollars you can use each month. Since the times of kings and queens and Rome, it has always been about owning the land, letting others work it, and getting rent of some form on that. Today, passive income is the number one need, and biggest differentiator from those who are truly wealthy and financially independent and everyone else. It doesn’t matter if tenants go out of business, change, or the crop is different, a repurposed property will still yield a higher and better use. It has income potential.
Inflation protection is one of the main things that really sets real estate apart from virtually everything else. Not even cash can maintain its value like real estate.
It doesn’t matter how much you make. What matters is how much you keep. Today the biggest gap between those two figures is typically taxes. This can be even more significant when transferring assets to the next generation.
Having a part in the development of communities
One of the greatest reasons to invest in real estate is the positive impact you can have on your community for generations. You help create jobs, improve people’s lives, and achieve something tangible. This is certainly a part of why all of history’s billionaires have carved out special pieces of real estate to become libraries, parks, monuments, schools, and destination attractions.
Before making another investment it’s important that we give some thought to why we’re investing, what makes for an intelligent investment, and the real values of commercial real estate investment compared to other assets. There are many benefits, but execution and the right strategy matters too. Though with the right mindset, it can become an incredible multigenerational wealth and income producing tool.
Want to know how you can get started in real estate investment? ReDev is an asset management company that specializes in acquiring and managing commercial properties to provide favourable returns for our partners. Get in touch with us today to learn more.