Offering consistent returns, real estate is one of the best markets in which to invest. Real estate, despite down times in the market, has historically appreciated in value over time. That means that an investment that is purchased today should be worth (on average) more in the future, based on how the real estate market is performing. Additionally, real estate investments can provide passive income to investors who purchase properties to rent or lease. Compared to stock investments, it takes less capital in real estate to generate a consistent return. While stocks can also be a good addition to your portfolio, real estate offers a variety of advantages over other investments.

Predictability

While every investment carries its own fair share of risks, real estate investments are far less volatile than stock investments. The passive income generated from real estate investments is also more predictable and on average offers a higher yield then the passive income from stock investments. While a stock can lose its value in a matter of hours, it typically takes much longer for a real estate investment to lose its value through depreciation, and real estate investments can be insured for other types of losses.

Appreciation

As briefly mentioned above, real estate investments can appreciate in value. While the stock market has also risen historically, real estate investments are far more consistent and lack the many peaks and valleys (volatility) of stock investments. The National Association of Realtors reported that real estate has risen at an annual rate of 6% since 1968.

Improvements

Unlike stocks, where you have only passive participate in the investment, real estate investments can be improved directly by the owner. The improvements that a homeowner does to a property raises the value of the property and helps the property appreciate. Many investors capitalize on the ability to improve properties through active investing strategies.

Retirement

Especially when compared to securities, real estate investments offer a variety of tax friendly strategies that can dramatically improve your net return profile. From year-to-year depreciation write offs, to 1031 exchanges, real estate can be a far more tax efficient investment vs. most other asset classes.