When you’ve got a nest egg of cash on hand and investment in mind, there are quite a few approaches to consider. Should you pour it into savvy stock market moves? Would backing an innovative new business be the best decision? Sure, both of those methods can prove lucrative. But if you’re looking to get as close as possible to a guaranteed return, we think real estate is the answer. So, should you buy real estate as an investment in 2022? Here’s why we say yes!
#1 It Provides in the Long and Short Term
One of the most beautiful aspects of real estate investment is that, depending on your plan for it, you can make money immediately and be building up a return for the future. The key to this is renting!
Let’s say you purchase a beautiful additional home in a popular location. If you buy it with cash, you can rent it out and make thousands monthly. Meanwhile, you’ll reap the benefits of its appreciation (real estate almost never fails to gain value long-term) many years from now, when you sell it for a major profit. Win-win! But even if you can’t buy it with cash, consider this: The rental market only gets hotter and hotter, and most mortgage payments are far lower than monthly rent. Just be sure to do the math, but you could pay your mortgage with the rent you receive and still keep some as an income stream. And of course, the appreciation of long-term value still applies.
Now for those of you reading that and thinking, “Yea, but I really do not want to be a landlord,” worry not! There are plenty of management companies out there nowadays. You’ll have to pay them to manage your property and renters, but if you’re paying cash or can achieve a pretty low mortgage-to-rent ratio, you’ll still take dollars home.
Expertise.com has this great list of Best Property Management Companies in Savannah 2022!
#2 You Should Buy Real Estate Because It Offers Tax Breaks
Ah, we have to admit that we love this one! Upon choosing to buy real estate for investment, you gain access to a plethora of fantastic tax breaks and deductions. Rocket Mortgage has an informative article outlining all of the ways you can save money from this process, but here is the basic list outlined:
- Deduct your expenses.
- Depreciate costs over time.
- Use a pass-through deduction.
- Take advantage of capital gains.
- Defer taxes with incentive programs.
- Be self-employed without the FICA tax.
Visit the article to read about each approach in depth!
#3 Real Estate Can Diversify Your Portfolio
The act of diversifying your portfolio is essential to a sound investment strategy. When you hear horror stories about someone’s investments taking a turn and destroying their finances, it’s likely that a lack of diversification is at least partly to blame. Think about how volatile and chaotic the stock market has been over the course of the past year. We aren’t saying you shouldn’t invest in that way, but it certainly makes a whole lot of sense to put your eggs in a few other baskets, too!
To buy real estate is a perfect way to diversify, because it behaves so differently from the stock market. Namely, it is far less influenced by current events. While of course real estate value does fluctuate based on happenings in the world and country, a review of the past few decades proves that it never loses too much value. Plus, even when it does, it almost always shoots back up and past where it started. Land is a finite resource, after all!
#4 It Can Also Be an Investment in Your Well-Being
As our final point here, we want to bring attention to the other aspect of investment real estate offers: a secondary place to land and a vacation property! We touched on this a little bit in another recent blog post, but when you buy real estate, you also make an investment in your physical security and general well-being.
Real estate offers another place to reside if your home is damaged by a natural disaster (or if this happens to a loved one). It can also provide you the opportunity to change your scenery when you want to. Whether for a vacation or just to switch up your work-from-home view, an additional property can mix things up in an enjoyable and healthy way!
For all of the reasons we’ve discussed here today, we think it’s a great idea to buy real estate in 2022. And if you are considering Savannah as the place to do it, we would love to chat with you about our various home types here at Upper East River, the last shimmering neighborhood tucked along the Savannah River.