We live in an age of information. Accessing that information can be a simple as pressing on the screen of a smartphone. The result of this easy access to information is that individuals can now make more informed decisions about their investment choices, and that choice is now more varied than ever before. However, access to information may have an unforeseen consequence. Although more information on investment choices is now widely available the sheer volume of information can be bewildering – especially for the novice investor, read more about investor choices at https://www.investor.gov/introduction-investing/basics/save-invest/learn-about-investment-options. There is one asset class that has been attracting savvy investors for decades – and that is property. Property tends to supply a superior return on investment in the medium to long term, and it acts as a buffer and safe haven when markets may come under pressure. At the very least those who are building a portfolio of investments should diversify that portfolio to include some property holdings.
Let’s take a closer look at some other reasons that property attracts such a loyal following when it comes to investment decisions.
Firstly there is the matter of leveraging an asset. Getting a loan from a bank has become increasingly difficult due in part to the credit crisis that was such a global concern in 2007 and 2008. Banks are now more reluctant than ever before to extend unsecured loans. However, the nature of property is such that a financial institution finds the level of risk when extending loans to buy property more acceptable than loans of other types. The property also appreciates in value and is not subject to wild market swings. All of these factors are taken into account by banks.
Then there is the stability of a property investment. Cash in a bank account, or for that matter shares are highly liquid. Turning a property into ready cash can be a long process, and that lends the asset class stability. Financial institutions love stability.
Then there is cash flow. There are very few other asset classes that will actually pay for themselves while the investment matures. Rental income allows the property investor to offset sunken costs. Managed correctly a property investment simply pays for itself.
A property also appreciates in value not only due to market forces and macroeconomic factors. A property owner can make improvements to a property and see an almost immediate spike in the value of that property. Improvements can take place at a pace that suits the individual investor. It’s difficult to make shares more attractive – the investor is at the mercy of the market. That is not the case with property. Add to this that the investor has control of expenses related to the property. Property management fees, upkeep and financial fees. Expenses like this can be budgeted for – and that can make all the difference when it comes to the investor’s peace of mind.
There are other advantages such as tax advantages and capital gains (among many other factors). Investing in a property simply makes sense. Especially in today’s economy where market volatility is almost a given.