Article by: Jorge Vazquez
Real estate is an intriguing investment choice for many, and there are compelling reasons to never part with your property. Here are the top five reasons you should consider holding onto your real estate assets:
1. Real Estate’s Unparalleled Performance:
Real estate stands out as a top-performing asset. Historically, it has created more millionaires than any other asset class. If you’re contemplating selling your property, think hard unless you’re certain there’s a better-performing asset out there waiting for you.
2. The Power of Leverage:
One of the most attractive features of real estate is the ability to leverage. With time and the right circumstances, you can extract money from one property to invest in another, essentially enabling your investments to ‘reproduce.’ Especially in rental scenarios, your tenants pay down the mortgage while the property appreciates, allowing you to draw substantial sums – potentially tax-free. This lets you reinvest without digging into your own pockets.
3. The Infinite Mortgage Payer:
If you have a rental property, your tenant could essentially pay your mortgage indefinitely. This debt, instead of being a burden, becomes an asset that not only pays for itself but can also generate positive cash flow, especially with rising rents due to inflation.
4. Real Estate: The Stock with Big Dividends:
Think of real estate as an exceptional stock. Your rents are analogous to dividends – only often more substantial than typical stock dividends. Add to that the appreciation (akin to a stock’s value rising), coupled with yearly rent increments, and you’ve got a winning investment.
5. A Simple, Effective Business Model:
Real estate offers a straightforward business plan. Everyone understands the asset, making it easy to create and execute a long-term strategy. It’s a pathway to early retirement and substantial returns if approached professionally.
A common sentiment among millionaires and billionaires is the regret of selling properties. Historical trends, even considering market crashes like that of 2007-2008, show a consistent upward trajectory in the long term. Land, after all, is a finite resource, making real estate a valuable long-term bet.
While some might argue the merits of flipping properties, it’s crucial to understand that successful flipping requires dedicated, full-time attention. Part-time efforts or attempts to time the market more often than not result in losses.
In conclusion, the overarching advice is clear: continue purchasing and holding onto properties. If you find yourself in need of funds, consider borrowing against your property’s value, which often comes with tax benefits. Selling should be your last resort unless you have a strategic reason backed by solid research.
If you find yourself in need of funds, consider borrowing against your property’s value, which often comes with tax benefits. Selling should be your last resort unless you have a strategic reason backed by solid research.