Real estate is a tangible asset that has the potential to produce income and increase in value over time. We cite, below, many reasons a typical individual, should consider investing in commercial real estate assets:
1. Dependable Source of Income:
Real estate investment strategies have evolved as market conditions have changed. In the past, real estate was viewed as a growth investment with tax advantages. Today, real estate can also provide dependable income to a typical investor.
2. Capital Appreciation Real Estate:
A recent study indicated that real estate in California over the past 50-years, or so, has increased by average of 7.3% out-performing the S&P by approximately 2 to 1. This rule, with few exceptions is true for many other States and Countries.
3. Diversification:
Portfolio diversification is the process of combining individual investments whose returns are not highly correlated, meaning that their returns do not necessarily move in tandem at the same time. In a diversified portfolio, investments that may be increasing in value can moderate others that may be losing value. In this way, diversification can significantly reduce overall portfolio volatility and risk. Furthermore, within the real estate portion of a portfolio, there is an opportunity for diversity by property type (Apartments, Office Buildings, etc.), geographic location, long-term or short-term investment structure.
4. STABILITY IN VALUE:
Real Estate provides investors with the potential of stabilizing their investment portfolio returns over time. Since real estate is not venerable to panic reactions to political and social surroundings it is relatively “buffered” from panic selling.
5. Hedge Against Inflation:
Real estate investments can provide protection from the depletion of earning power caused by inflation. Actually, inflation may cause the value of the real estate to increase, thus providing the investors with a “Hedge” to maintain or at least keep the overall assets protected from depletion.