Why Real Estate Might Be Your Next Investment Move

Real estate can play a vital role in building a successful investment portfolio. Here are a few reasons why you might want to consider real estate as your next investment move:

Sellers are motivated.

A looming recession creates motivated sellers. Some homeowners are looking to get out of the market or sell for the best possible price now. This motivation is fantastic for buyers, as sellers are generally more open to negotiation.

Interest rates are at a historical low.

While it may sound like a cliche sales phrase tossed around in mortgage sales pitches, but in August of 2020, the rate for a 30-year fixed-rate mortgage did hit a historic all-time low of 2.88%. For buyers, this means lower monthly payments and the potential to get more house for the dollar.

Tax breaks and deductions

Investing in real estate can open the door to tax breaks and deductions. Some of the most notable tax deductions available to real estate investors (typically those who own rental property) include the costs associated with mortgage interest, property tax, operating expenses, depreciation, and repairs. Investors can also deduct their mortgage interest on their primary — and sometimes secondary — residence. This deduction applies to home purchases or newly refinanced mortgages, home equity lines of credit, and home equity loans.

Diversification can add stability.

Real estate is not always correlated with the stock market and varies greatly depending on factors like local economies. Diversifying your portfolio with real estate can generally add stability.

Passive income.

The long-term cash flow from rental income provides passive income. Plus, property purchases can appreciate over time, boosting your profits without added work.

However, there are myriad risks and considerations. Deciding to invest in real estate requires cash for purchases or down payments, and because real estate can take a long time to sell, your funds won’t be as liquid and readily available should you need them. Other disadvantages include the costs of property management and the investment of time that goes with running what is essentially a part-time business if you choose to manage the property yourself.

Deciding if, when, and how to invest in real estate is a complex decision that should be part of a whole-portfolio management strategy. At Aspen Wealth Strategies, everything begins with understanding your goals and taking a comprehensive view of your financial framework and real estate’s role within it.

We look at the short-term and long-term factors, analyze the local, regional, and global economies, and lean into the robust resources and experience of our private wealth management firm. The result is a custom strategy and plan of action that’s made just for you. Let’s get started.

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