Why Real Estate Is a Good & Profitable Business ? Many people nowadays are investing in the real estate business. There are lots of logical explanations why people are doing so. One of these is because of the profitability of the said business. As one of the best real estate companies in the United States, we will show you through an infographic why the real estate business is a good and a profitable business.
8 Reasons Why Real Estate Investing is a Profitable Business
- In the United States, the local housing sector accounts for 15% of the total gross domestic product every single year. As a matter of fact. The American United States reached an record high of 68% in home ownership in the year 2006.
- The United States was #1 in terms of the number of global commercial real estate investors in the year 2012. The real estate market of the country was one of the most competitive globally.
- Real estate investments profit more than stock investments. As a matter of fact, the real estate industry appreciated at a rate of 12.4% annually as compared to stocks with a growth of only 4.3% annually from the year 2001 to the year 2006.
- Mortgages on real estate can amplify cash returns. This is mainly because mortgage interests are deductible and has a long-term gain rate of 8.6%.
- Real estate can be inspected physically before even investing. You can spot physical defects easier than spotting fraud in stock investments.
- Real estate is more stable than stocks. As a matter of fact, even in worst years, the real estate industry can record a positive profit no matter how small the percentage is. The effect is opposite on the stock market. In worst years, stocks record substantial loss rather than achieving smaller profit.
- Investing in commercial real estate has a lot of benefits. Aside from attractive returns, commercial real estate has a hedge and protection against inflation. It means that the real estate market adjusts to the changing price levels. Moreover, having long-term tenants in commercial properties gives you the advantage of having long-term profits.
- Real Estate Fund Market outperforms the equity and bonds.
3 Commercial real Estate Investment Options
- Private- Investors pool private funds and invest directly on commercial properties.
- Core Real Estate- It is an open-ended investment on stabilized commercial properties. It provides quarterly liquidity because of its stability. It also has a high rate of profitability.
- Opportunistic Real Estate- It is a close-ended real estate investment that raises capital through blind-pool limited partnerships. In this kind of investment, the bulk of the profit is realized when properties are sold. However, it poses a higher risk for the commercial real estate investors.