8 great reasons to invest in real estate

In our previous article, we delved into the concept of asset allocation and its critical role in building a robust investment portfolio. Today, we’ll focus on real estate, one of the most popular alternative asset classes. This asset class has garnered significant attention from both novice and seasoned investors alike.

Let’s explore eight compelling reasons why real estate should be an integral part of your investment strategy.

Competitive Returns

Real estate investments have historically provided returns comparable to those of the stock market. While the S&P 500, a diversified stock index, has yielded an average long-term return of approximately 10% annually, diversified long-term real estate investments often match this performance. Moreover, short-term real estate investments, such as residential development projects, can potentially offer even higher returns. Mortgage-backed construction loans are particularly attractive, combining the security of collateral with high returns and a shorter investment horizon.

Hedge Against Inflation

With central banks globally engaging in expansionary monetary policies, the risk of inflation eroding your purchasing power is a genuine concern.

Real estate prices have historically demonstrated a strong correlation with increases in money supply, inflation rates, and wage growth over extended periods. This characteristic makes real estate an excellent hedge against inflation, preserving your wealth in real terms.

Low volatility

While equities offer attractive long-term returns, they are subject to significant short-term volatility.

Real estate, in contrast, presents a more stable investment profile. Even during economic downturns, rental properties can continue generating income. This stability is primarily due to the higher transaction costs and longer timeframes associated with real estate deals, leading to fewer, more considered transactions.

Consistent Cash Flow

Investing in rental properties or providing loans to real estate developers can generate regular, predictable income streams through rental revenue or interest payments. These consistent cash flows can be reinvested to further enhance your overall return on investment, harnessing the power of compound growth.

Investment Security

Real estate investments are inherently secure.

As an investor, you either gain direct or indirect property ownership or, in the case of lending to developers, receive a mortgage as collateral. In the unlikely event of a default, the collateral can be liquidated to recover your investment, providing a safety net.

Transparency

Compared to financial assets like stocks, where understanding a company’s intrinsic value requires in-depth industry knowledge and financial acumen, real estate investments are generally more transparent.

Analyzing the costs and projected income of a real estate development project or the lease income and expenses of a rental property is relatively straightforward, allowing for more informed decision-making.

Direct control

With direct real estate investments, you maintain control over your investment decisions.

You can diversify across various real estate asset classes and tailor your portfolio’s risk-return profile to align with your financial goals and risk tolerance. Platforms like Crowdestate further empower investors by giving them with direct control over each investment decision within their real estate crowdfunding portfolio.

Accessibility through Crowdfunding

Traditionally, real estate investing required substantial capital and time, making it inaccessible for many. However, the advent of regulated real estate crowdfunding platforms like Crowdestate has democratized this asset class.

With Crowdestate, you can start your real estate investment journey with as little as 100 euros and minimal time commitment. The platform offers cross-border access to a diverse range of professionally managed real estate investments, making it easier than ever to build a global real estate portfolio.

Conclusion

Real estate offers a compelling value proposition: competitive returns, inflation protection, stability, regular income, security, transparency, and control. However, the high entry barriers of traditional real estate investing have kept it out of reach for many. Crowdestate breaks down these barriers, providing an accessible, transparent, and user-friendly platform for anyone to start building wealth through real estate.

In our next article, we’ll provide guidance on how much of your portfolio you should allocate to real estate. Until then, we encourage you to explore the opportunities available on Crowdestate. Take the first step towards a diversified, resilient investment portfolio today. Remember, in the world of investing, time is your most valuable asset.

Start your real estate investing journey with Crowdestate now!