let’s talk : WHY I decided to invest in Real Estate?
Good morning & happy Wednesday!
As many of you are aware, I made a drastic career change this month and left the world of finance to pursue a future in real estate investments. Thus far, I am 8 days into building a new normal and it has been more exciting than I could have imagined.
I hope to start this weekly (maybe daily one day!) email blast to help us all keep in touch and give us an outlet to talk about real estate! Whether it be about different markets, various cities, or specific deal opportunities, I hope to keep this as fluid as possible and create an environment where we can all bounce ideas off of & learn from each other.
Today, as I start the inaugural weekly email blast, I thought it was only appropriate to start with the basics – Why invest in Real Estate?
Investment Types: Real Estate- Why invest in Real Estate?
Reasons for investing in real estate can be different depending on the individual. I have compiled what I have found to be the Top 3 reasons one might choose to invest their money in real estate, and why I personally decided to take this plunge and enter the world of real estate investments.
#1 Financial Freedom
This is by far the #1 reason most people start investing in real estate (I am not stating a statistical fact this is purely based on all of the podcasts I have listened to / books I have read). When I first learned the concept of “being financially free” my immediate response was “What does that even mean??/ I must become whatever this is”. Essentially, financial freedom is one’s ability to create independent wealth without having to rely on a typical 9-5 job for life’s necessities. To me, being the control freak that I am, I LOVED the possibility of being more in control of my financial future. Being financially free is different for each individual but the potential is limitless. So, what does financial freedom have to do with real estate investments? Investing in real estate is simply a vehicle one can use to help create this financial freedom, and the best part is – there is no one size fits all method for this. There are many different approaches one can use to invest in real estate (rental properties, flipping, wholesaling, money lending, etc.) based on an individual’s personal goals & needs.
#2 This is not a fad- People will forever need a place to live
I always considered myself to be risk averse until I decided to leave the corporate world to “pursue my passion”. Lucky for me, my passion revolves around something that will forever be a necessity (knock on wood)! There are SO many fads out there, whether it be the comeback of the old school adidas or the crash & burn of Myspace – we have all seen these “super trendy” crazes rise to the top and fizzle out over time. These trends have all had an expiration date, however real estate is much different! While the housing market will inevitably have its ups and downs, people will always need a place to live.
#3 Asset Appreciation
Real estate is one of the very few assets that actually can appreciate over time! This logic is crazy awesome, in my opinion, as the only real asset I have ever owned decreased in value within 30 minutes of even purchasing it – my first car. When I think back to buying my first and only car (this was only ~4 years ago), I was INSISTENT that I must have a brand new 2014 Jetta. I dragged my parents out to a dealership in Maryland, just so I could purchase my beautiful, brand new, black Jetta immediately that afternoon. The minute I drove that bad boy off the lot, or my Dad did, because let’s face it, I was too nervous to do so, the value dropped 25%. I kid you not, we had done nothing to this car except drive it 15 miles home and it was already worth thousands of dollars less. It was beyond depressing to find this out when I went to sell the car for ½ the original purchase price only 24 months and 17,000 miles later. I have now learned my lesson on that and will be focusing any future investments on appreciating assets only (and used cars in the future). The other great news about asset appreciation? There are two types; Natural & Forced. Yes, one of those types says “Natural” – your house can literally increase in value over time by doing nothing other than simply existing as a home; the only downfall about this is that it is out of your control and highly dependent on your surrounding market. The other type of appreciation is “Forced”, meaning you are forcing your property value to increase through various methods such as updating the physical aesthetics of your home, or for an investment property, simply increasing rents while decreasing expenses. There are many different ways to increase the value of your home over time, which is AWESOME, however it is always important to take note of the possible risks. When calculating your home’s appreciation take note of the “inflation adjusted value” to ensure you are making a true gain. Furthermore, continuously monitor your surrounding market because just as a home can easily appreciate, it can also quickly decrease in value if there are natural disasters, job loss, crime sprees, etc.
I wanted to focus my first email on this topic because I know many investors get asked “Why Real Estate??” time and time again. I hope you can use this list to help you find your personal “WHY” if you are considering investing, or help re-affirm your own reasons if you have already started your investment journey.
Thank you so much for being a part of this and please know that I am open to any and all feedback on how this is structured, content, writing style, etc. As we go forward I hope to make this more analytical, factual, and even just helpful as well all work to build our real estate portfolios.
Have a happy holiday weekend!
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