What is the deal with the economy? This question is on many peoples’ minds as they watch stock prices, home prices, and the cost of goods and services go up and down over the last few months. After a solid year of growth in 2021, things suddenly look rough in 2022, but this is not necessarily a bad thing. Predicting the economy is nearly impossible and even the best investment bankers will tell you that. However, responding to the economy is much easier. The question then becomes: How do you respond to the current economy? The answer: Add referral network real estate and other types of real estate to your investment portfolio. Here are seven reasons why now is the time to do so.
Billionaires Are Looking to Buy
One of the reasons why property became so valuable in the last couple of years is that billion-dollar real estate companies set out to buy up everything they can. And this means literally everything possible, from neighborhoods to plots of land.
This does not mean to buy a house and then immediately sell it to the first real estate company who offers you money. You can make a profit off the property; however, the real payday comes from buying real estate and waiting. Eventually, unbought real estate will be in short supply. At that time is when when you charge a higher price for your property.
Renters Look to Rent
Renting an apartment is currently as easy as it ever was. However, renting a house is not. The prices of homes increased so much that the people who bought a home 20 years ago now must rent for the same space. This changed the home rental market entirely.
The demand for homes is so massive that most people looking to rent must pay just to apply for the chance to be chosen to live in a space. These ridiculous standards of approval mean that it does not take much for you to make a more appealing rental property for renters to rent.
Real Estate Serves as Equity on Loans
There are two kinds of people in the world: Those who know of the economic advantages of owning a home, and those who do not. This is something to read about frequently on the Teifke Real Estate home page, as it is one of the biggest advantages of home ownership.
Imagine that you take out a loan. The debtor giving you the loan is giving you their money. They expect to get that money back, plus interest. How do they know you will not skip town with the cash? There are many ways they manage this risk, but the best is collateral.
You put your home forward as collateral on a loan. The advantage of homes is that they do not go anywhere. If you skip town with the money, you are leaving your home behind. So, be careful not to fail to pay off the debt, or you will lose the property.
Real Estate Is Always Valuable to an Investment Portfolio
Imagine you woke up tomorrow to find that inflation increased by 10,000%. A dollar today is worth less than a penny was yesterday. In that sort of nightmare, what is a home worth?
The funny thing is that while your money’s value evaporates in this scenario, your home’s value does not. It is too simple to say it “stays the same,” but insulates from such financial turbulence than fiat currency due to being more real (as the name implies).
It Barely Fluctuates in Value
It is important to note here that “value” and “price” are not the same thing. The price of a property fluctuates. But the value of a property relative to everything else in the market does not. When you look at real estate like this, you begin to realize how valuable it is for your investment portfolio.
Very little changes the value of a property. If it is farmed, exploited for resources, or used to raise a family, those capabilities stay the same. This is unless someone invents something truly world changing. Compare that to a stock, which changes value constantly.
Passive Income Strategies
This is where the real money in real estate is. Say you own a property. It is a patch of land with a house on it. Well, it does not need to have a house on that property, does it?
Here, you get a loan from a bank (using the house as collateral) to pay a construction company to build a duplex, an office building, or something that someone wants to rent. Then, once you find a renter, you pay back much more than the loan payments. You can have income.
Seek Investors
It is easy to imagine property as an all-or-nothing kind of commodity. Either you sell it, or you do not. But rising in popularity these days is “fractional ownership” of real estate. That means someone owns part, but not the whole, of a property.
This is a common strategy in investment banking. Here, you do not sell your property all at once, but slowly over time. This allows you to get more money out of it as you adjust the price of later fractions of the property to inflation.
Conclusion
The simple fact that there are so many ways to capitalize on owning real estate should give you a good idea of why it is valuable to an investment portfolio. The best part about all this is that the facts are true regardless of what kind of economy you are in.
Whether there is a housing boom, bubble, or bust, property is always worth something. Just be careful that you know of your actions before you try anything too interesting.
