The reality for many hard-working Americans is that living from paycheck to paycheck won’t build your long-term wealth, leaving you with only enough income to cover the essentials. But for people who are looking to widen their assets and increase their savings over time, investing in real estate is one of the best avenues for beginners.
The stock market is typically the go-to place for seasoned investors, but the volatile space and higher risks don’t make it friendly for aspiring investors. Alternatively, buying real estate offers better diversification opportunities, higher returns, and lower risks for beginners.
Keep in mind that one market isn’t necessarily better than the other since the right choice depends on your goals, risk tolerance, and financial situation. This begs the question: is real estate investing the right move for you?
Exploring the Pros and Cons of Real Estate Investing
What are the Pros?
- There are always people buying and selling in the housing market, which means the demand gives the sphere stability compared to the stock market’s fickle nature. While you can’t expect to earn as much as you can reap in stocks, buying real estate guarantees a steady source of income on the side.
- As mentioned above, real estate investing is an excellent choice for increasing your sidelines. With a promise of providing a steady cash flow, you can earn enough capital to invest in more rental properties to skyrocket your revenue stream. Not to mention, properties often increase in value over time.
- Dealing with taxes can be frustrating for anyone, but the good news for real investors is that you have plenty of tax breaks you can utilize to ease your financial responsibilities from your mortgage interest, property taxes, depreciation, and more.
What are the Cons?
- Compared to investing in stocks, the potential returns for real estate investing aren’t as lucrative. If you need to see the difference in a fuller context, think about how the S&P 500 gained over 600 percent while the housing market only increased by 160 percent.
- You have to deal with plenty of cash in hand when buying real estate and set aside a dedicated budget for building maintenance, improvements, inspections, and more.
- Compared to liquid investments like stocks, you can’t turn a property into cash as fast as you would when selling stocks.
The Bottom Line: Choosing Whether Real Estate Investing is the Right Move For You
There’s no right or wrong when it comes to choosing where to invest your money, but the best choice should meet your unique goals, financial circumstances, and risk tolerance. Nonetheless, the long-term revenue stream, tax benefits, and full control you have with your investments make the housing market ideal for beginners.
Are You Looking for a Reliable Mortgage Company in Dallas, TX to Support Your Real Estate Investments?
Getting the ball rolling for your real estate investment portfolio is not an easy task, especially for beginners who don’t have the financial stability to cover your new venture. Fortunately, New Frontier Financial is here to help make it all happen.
Our mortgage lenders are committed to helping you achieve your goals; that’s why we offer competitive loan options for borrowers with unique needs.