Let Your Money Do the Work: Why to Invest in Real Estate

So you want your money to work for you—but what’s the best approach? Most people start with traditional types of investing, which usually involve stocks and bonds. If we’ve learned anything from 2020, however, it’s that the stock market rises and falls unpredictably.

Investing in real estate is an alternative to traditional investing that can provide long-term financial consistency and unique tax benefits. If you do your research and find the right opportunity, real estate investment can be your solution to making steady passive income.

Why real estate?

Real estate is considered a good investment because it provides something that will always be in-demand: housing. This ensures that in the long run, real estate will consistently out-perform other types of investments and often allows for a monthly cash flow that you can use towards another investment or to offset your own cost of living.

While it might feel safer to leave your savings untouched, money that sits in an account earning 0.05% in interest will actually lose value to inflation. Even if you find an account with a higher interest rate, like 0.6% with American Express, you’re barely making up the lost value over time.

Passive Income from Real Estate

Many investors buy a duplex or triplex and rent out the units to make additional income. While it’s a great option for some, there are other more hands-off investment strategies that take up less time while still providing the opportunity for consistent returns, giving you the chance to travel and enjoy your free time while still offsetting your cost of living.

Commercial Real Estate

For an approach to real estate that doesn’t involve fixing toilets in the early hours of the morning, consider commercial real estate, which entails large apartment buildings of five or more units. Down payments for these buildings are significantly higher, but you can join other investors in a syndicate, which allows you to pool your resources.

Finding other syndicators for commercial real estate might seem intimidating, but there are meetups and conferences throughout the country where you can meet interested investors and learn more about this exciting form of investment.

Investing with a SDIRA

Real estate investment isn’t only an opportunity to use what’s in your savings account—it can apply to other types of accounts as well. An IRA account or an old 401(k) from a past job can be turned in a self-directed IRA account (SDIRA). With a SDIRA, you can directly invest funds in real estate or any other type of investment, such as REITs (Real Estate Investment Trusts), or buy a rental property.

Considering Your Options

There’s a different type of investment for everybody. Real estate works both as a way to get cash flow and as a long-term strategy to optimize your savings. Whether you’re looking for a long-term investment or just want the opportunity to make some passive income, real estate offers practical ways to see a return on your money that you can use to improve your lifestyle and pursue your goals.