Real Estate as an Alternate Investment – For Individual Investors
Individual investors are used to thinking about their investments in terms of either stocks/equities, bonds/fixed income or cash/cash alternatives. The stock market has had a good run – since its crash several years ago. Bonds historically have been felt to be a “safer investment” although with interest rates eventually going up – there’s market risk associated with them. Cash tends to be the safest short-term – although with interest rates so low, the investment return is minimal.
Many investment advisers recommend also having alternative investments – and single family investments (i.e. single family homes, condos, townhomes) may present an excellent opportunity. They’re easy to understand (versus master limited partnerships available through brokers) and you’re getting a tangible asset that you can control. Depending on an investor’s background, time commitments and proximity to a rental – professional property management should be considered. “Investor demand for single family properties remain strong”, said Kirk McGary, CEO of Real Property Management. “Trends like this in the housing market have created significant demand for property management companies like ours, as investors choose to put their money in real estate as opposed to the alternatives.”
Because you can finance much of the purchase price, you can leverage your investment for a greater return versus stocks, bonds or cash. Properties also offer tax benefits such as deductions for mortgage interest, taxes, cost of repairs and depreciation. Because of this, in an ideal situation an investor will have a positive cash flow, a positive return on their investment – and reap tax benefits.