5 Reasons to Add Real Estate to Your Investment Portfolio

Any investment broker or portfolio manager will tell you to diversify your assets. In fact, this is probably one of the few recommendations these guys will agree on. Another is that real estate is a great asset for achieving diversification. Obviously, I’m not going to argue that point, but I would like to expand on it. Specifically, I want to tell why I believe that real estate is the most valuable asset you can hold, and why you should absolutely include it in your investment portfolio.

Reason #1 - Real estate is less turbulent than other asset classes

The stock market is fine and dandy for a lot of people, and there are many out there who tout its effectiveness at building wealth. What they don’t like to talk about, though, is how each and every investment is at the market’s mercy. When the market is up, it’s cause for celebration. But when it’s down, it can wipe out funds in the blink of an eye. And there’s literally nothing you can do about it. Real estate, however, is much more predictable. While it’s not completely immune to ups and downs, these changes usually happen slower and with more predictability, allowing you to make better decisions regarding your properties.

Reason #2 - You have much more control

This one kind of piggybacks on Reason #1. Because of the volatility that exists with other asset types, you lose a lot of control over your investment. With real estate, you are completely in the driver’s seat. You have near-total control over your asset and its value. You get to decide if you want to upgrade your property to add value, you decide if you want to rent it out and to whom, you decide when to sell...the list goes on and on.

Reason #3 - Real estate will never NOT be in demand

Did you hear the news that NASA identified 7 new planets, and some of them may exhibit Earth-like qualities? It’s a pretty incredible discovery, and one that could hold a ton of potential for us humans here on Earth. Because let’s face it, the Earth isn’t getting any bigger, but the population certainly is. If you’re wondering what this has to do with real estate, it’s this: people will always need a place to live. And right now, Earth is all we’ve got - and we’re running out of room. If you hold property on our beloved home planet, you have something to offer. Whether you sell it for a quick turnaround on your investment, or rent it out for long-term cash flow, you hold the power as a property owner.

Reason #4 - It gives you leverage

When you own real estate, you have impressive leveraging power - something you don’t always get with other types of investments. Your property has a real value, and you’re able to borrow against it to obtain capital for other investments. Even if you don’t own a property outright, you can use that piece of real estate as collateral. You can then use the funds to upgrade the existing property to add value, or you can use them to purchase more property and expand your portfolio. Leveraging your investment in this way allows you to build wealth at a much faster pace.

Reason #5 - There is amazing opportunity for cash flow AND appreciation

Real estate is a winner for both short- and long-term gains. If you’re renting your property out, you can - and should - make positive cash flow every month, and you can do this until you sell the property. When you are ready to sell, your property will likely have appreciated, resulting in a nice little payout once you’ve closed the deal.

Real estate is, hands down, the best way to invest your money. While having other asset classes in your portfolio is definitely a smart move, real estate has proven again and again that it is king among investments.