Why You Should Invest in Real Estate over the Stock Market

Title "Why You Should Invest in Real Estate over the Stock Market" in lime green letters over a pastel green background, an assortment of green cartoon houses below it

Investing is the best way to put your money to work and build your wealth over time, and there are tons of investment options to choose from. A great option is to invest in the real estate market. Many investors prefer it because it comes with many perks, such as earning passive income and growing their equity.

Before making an investment, it’s essential to do some research. Choosing the right option for you can significantly improve your return on investment. To help you choose, Limehouse Property Management will go over the top reasons to invest in real estate over other investments, like stocks.

Reasons to Invest in Real Estate

While real estate investments come with certain risks, they can lead to great outcomes. Investing in Virginia real estate comes with plenty of perks, including passive income, equity growth, tax breaks, and long-term security.

Ways to Invest in Real Estate

Another benefit of the real estate market is that it offers plenty of investment opportunities. You can invest in: 

  • Real estate investment trusts (REITs). This is a great option if you have experience investing in mutual funds, and you want to invest in real estate without worrying about maintaining a property.
  • Residential properties. When you buy a property, you can make money just by living in it, as the value of properties goes up over time. You can go a step further and rent or sell the property to make more money. Make sure to explore all the options to finance an investment property

“For Sale” sign in a residential property’s green front lawn

  • Commercial properties. Whether you buy a retail or office space, you can make a lot of money renting out a commercial property.
  • House flipping. Buying a home at a low price to fix it up and sell it at a higher cost is always a sound investment. Although it requires a big initial investment, the payout can be worth it.
  • Land. Whether you decide to build a residential unit there or sell it to a construction company, investing in land can help you get a high ROI.

The best part is that, once you purchase a rental property, you can hire a professional property manager to take care of it! They can handle the day-to-day operations of your rental so that you can have time for other things.

Reasons to Invest in Real Estate over the Stock Market

Real estate investments have big potential, but for many investors, they may seem like a lot of work. While other kinds of investments, like stocks, require less hands-on work, real estate investments offer many benefits. Here are the top four reasons why you should be investing in real estate:

1. Stable Passive Income

When you invest in stocks, you usually can only enjoy your earnings when you cash out. With real estate investments, you could earn a stable cash flow every month and know that your wealth is still growing. 

Open black envelope filled with U.S. dollar bills

Rental properties, both residential and commercial, let you earn a monthly passive income without much work. Plus, the longer you own a property, the more your equity grows!

2. Less Volatility

The stock market is highly volatile. This means you can make a lot of money in just one day, but can lose it just as quickly, depending on the market trends. The real estate market, on the other hand, offers a far more stable environment and less market volatility

While real estate investments aren’t free of risks or market fluctuations, in recent years, the real estate market has remained stable, with the price of properties growing steadily.

3. Tax Deductions 

Investments are considered capital assets, so they’re taxed accordingly. However, real estate investments offer many tax deductions.

For instance, when you purchase and rent out a residential property, you can deduct the mortgage interest, necessary improvements, insurance, and even property taxes. This can save you a lot of money in the long run.

Additionally, with real estate investments, you can defer capital gain taxes when you sell. This is typically done with a 1031 exchange. This means you can sell a property used for business or investment purposes and not pay taxes if you purchase a “like-kind” property next.

Wooden squares reading “Tax” in black letters on top of tax documents

4. Diversifies Your Portfolio

When it comes to investments, you shouldn’t put all your eggs in just one basket. If the market falls, you’ll be at risk of losing a lot of money. Instead, it’s best to invest in various assets, markets, and industries to keep your money protected and continue building your wealth over time.

Real estate investments are a great way to diversify your portfolio because they’re different from many other kinds of investments. Plus, their stability gives you the peace of mind of knowing your money is safe.

Bottom Line

Real estate investments and stocks both come with their fair share of risks and benefits. However, the real estate market offers more perks, including tax benefits, reduced volatility, and the opportunity to diversify your portfolio. 

If you’re ready to start investing in real estate, contact Limehouse Property Management! With our years of experience and expertise, we can help you get the best return on your real estate investment.