Real Estate Remains a Strong Wealth Management Investment
A young long-haul trucker driver once took an elder's advice and invested all his money into real estate. Even though he was seldom at home to enjoy the fruits of his labor, he hired a property management company to handle the properties. The advice that stuck with the driver was simple.
"They're not making any more of it, land that is."
In terms of growing personal wealth, the real estate market may fluctuate, interest rates change, and the GDP can bounce like a ball. But land is permanent. That may seem like a simplistic view of wealth management. Maybe it is. But that trucker retired early with multiple investment properties and a reasonably wealthy man.
His portrayal of wealth management success highlights the notion that real estate remains a strong financial driver. The next logical question is whether or not now is the time to build a powerful real estate portfolio.
Current Market Conditions
Real estate investment does not necessarily follow the popular stock market thinking about buying low and selling high. In fact, investors such as the truckers had no plans to sell at all. The current real estate trends are widely considered a "seller's market." Are they really? With Millennials and soon Generation Z buying up homes, inventory remains lower than demand.
That naturally has resulted in an uptick in listing prices. Couple the supply and demand issue with a Fed raising rates and one might think this is a bad time to buy. Nothing could be further from the truth.
Buying rental properties are long-term investments. Buyers would be wise to do the math on how much the monthly mortgage, insurance, taxes and overhead measure against the potential revenue. Some property owners do their math based on 10 months rather than 12 to account for unexpected expenses.
If the math works, it could be an asset.
Real Estate Less Risky Than Stocks
Return on investment in real estate has the potential to far outpace stock buys. Consider that when you purchase a stock, things outside your control impact value and dividends. Think for a moment about how Elon Musk turned Tesla stocks into a roller coaster ride due to a few odd tweets and media interviews.
Owning property insulates investors from many external forces. Over time, rental revenue pays down the note. This allows owners the ability to siphon off money or leverage equity for additional real estate buys. With measured determination, your wealth management portfolio could include multiple properties that are paid off at retirement age. It worked for a truck driver who took some simple advice from an elder.
There's little doubt that real estate remains a strong asset for increasing personal wealth. If you are considering making a purchase, be sure to contact a trusted mortgage advisor with Bond Street Mortgage as soon as possible.
Frequently Asked Questions
Real estate is considered strong because land is permanent and not being made anymore, providing a lasting asset that can appreciate over time despite market fluctuations.
The trucker hired a property management company to handle the properties, allowing him to invest without being physically present.
Yes, despite higher interest rates and low inventory, long-term rental property investments can still be profitable if the monthly costs are carefully calculated against potential rental income.
The current real estate market is a seller’s market due to high demand from Millennials and Generation Z buyers and low inventory, which has driven up listing prices.
Real estate is generally considered less risky than stocks because it offers potential for steady returns and tangible assets, unlike stocks which can be more volatile and influenced by external factors.
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