Americans believe that real estate is the best long-term investment today. This is the second year in a row that real estate trumped investments such as bonds, stocks, gold, and CDs for the top investment spot.
What Do the Stats Say?
According to a Gallup poll, 31% of Americans think real estate is the best long-term investment, followed by stocks and mutual funds at 25%.
Gold dropped to third place this year. It was only a couple of years ago during the gold boom that it held the top position.
When you look at the Gallup surveys, you’ll notice that real estate has been trending higher each year since 2011.
Real estate is the top choice, or at least tied for first, among all of the various gender, age, and income groups according to Gallup. Men and women of all age groups and all economic classes agree that real estate is a fantastic long-term investment.
Bankrate.com also conducted a survey of 1,000 investors, and the majority (27%) said that real estate was the best investment for money they would not need for at least a decade. In this survey, real estate was followed by cash at 23%, stocks at 17%, and bonds at 5%.
Breakdown of the Gallup Poll
Let’s look at a breakdown of the Gallup poll to get a better idea of where different respondents stood.
- Gender: 33% of men and 29% of women preferred real estate to stocks, mutual funds, gold, savings accounts, and bonds.
- Age: 31% of men between 18 and 49, and 28% of women in that age bracket, chose real estate over the other options. 34% of men over 50, and 31% of women over 50, chose real estate.
- Income: 33% of respondents making more than $75,000 per year chose real estate, while 38% chose stocks. 33% of people who made between $30,000 and $74,999 chose real estate over the other options. And 25% of those who made under $30,000 chose real estate.
Mind-set Is Changing
The housing crash is becoming a distant memory in many Americans’ minds. They realize that times have changed, and the policies of lenders are different. This helps make the real estate market safer than it was before the crisis. While the requirements for getting a loan are more stringent, most Americans view that as a good thing, because people who can’t afford real estate are not investing. Moreover, the real estate market is viewed as more stable since there are more checks and balances.
Therefore, people feel confident again when it comes to buying real estate, and realize that it has great long-term potential.
What Makes Real Estate Attractive as a Long-Term Investment?
#1 Fixed and Tangible Investment
Real estate is a fixed and tangible investment that can be seen and touched, which for many people tends to offer more peace of mind than intangible investments such as stocks. Real estate prices tend to be more stable as well, which provides investors and homebuyers with more peace of mind.
#2 Tax Advantages
Real estate has the potential for numerous tax advantages for both homeowners and investors. Be sure to consult your tax expert to learn about the tax advantages of real estate as it applied to your personal situation.
Over time, real estate tends to appreciate (go up in value). While there might be some highs and lows during the time you own a piece of property, the trend is usually upward in terms of value. By researching local real estate markets, investors can deduce the trend in local property prices to project whether their investment properties will increase or decrease in value over time.
#4 Passive Income
Real estate investments have the potential for passive income through leasing the property to tenants. Properties in good locations, can produce monthly cash flow that investors can use to pay expenses, fund their business, and leverage to fund future investments.
#5 Inflation Hedge
Real estate is an excellent hedge against inflation. As inflation goes up, housing values and rents go up, stabilizing an investor’s portfolio.
By investing in real estate for the long-term, investors can protect themselves against inflation and preserve their wealth.
#6 Retirement Income
Many people retire without enough money, and have very little means of generating an income through retirement. But real estate investors with cash-producing properties receive an income for as long as they own the properties.
Retired investors often have paid for their properties in full, and have them managed by a third party, enjoying a retirement income with virtually no work.
Though not as liquid as cash, real estate is bought and sold on a daily basis. So with proper planning, investors can sell their investments in a timely and profitable fashion.
But with this said, let’s emphasize the importance of having an exit strategy from the very beginning. Most investors will want to sell at least a portion of their portfolio during their lifetime.
What Are the Risks?
Of course, it’s important to recognize that there are risks associated with all forms of investing, including real estate.
Real estate investing is not like day trading stocks, where you open a position in the morning and close your position in the afternoon. Real estate investing is a long-term proposition.
Also, remember that real estate markets tend to be local. So risks vary between cities, states, and countries. So choosing to invest in geographic areas where real estate is appreciating can increase profits.
Americans believe that real estate is the best long-term investment, especially in light of the performance of other asset classes. To increase profits, many investors use real estate experts to help them in every aspect of real estate investing, including locating, buying, rehabbing, managing, and selling investment properties.
Graystone Investment Group is designed to help new and seasoned investors find, rehab and manage investment properties. We have researched the Tampa Bay area neighborhood-by-neighborhood to determine where investments are likely to have the most return per capital. Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.