Why invest in real estate?
Savings can sit in bank accounts or be tucked under the mattress of your bed, but neither of these options can build wealth like a thoughtfully planned investment.
When considering the volatility of the stock market and the instability of the world economy, a would-be investor could understandably be hesitant. However, Capital Square specializes in strategic investments poised to perform in both good and challenging economic environments.
Real estate is not correlated to stock markets, and multifamily assets historically perform at exceptionally high levels. For example, despite a global pandemic that shut down major portions of the U.S. economy, multifamily real estate assets had high occupancy, low defaults, exceptional rent growth, superior financing and inflation protection.
If you ask, “Why multifamily real estate?,” we have answers to that too, but when looking at the real estate industry as a whole, here’s what you need to know:
Why you should consider investing in real estate?
- Stable cash flow – Real estate investments generate regular income from rent paid by tenants.
- Tax benefits – Section 1031 permits gains to be deferred on the sale of investment/business property. Additionally, real estate provides material tax benefits unavailable to other investments.
- Appreciation – Real estate typically appreciates over time, resulting in gains that can be deferred in future exchanges or realized upon sale.
- Depreciation deductions – Real estate provides material tax benefits, such as depreciation deductions, that are not available with other investments. In fact, depreciation is one of the most compelling benefits to real estate investors because depreciation is a non-cash deduction. (In other words, you don’t pay for it). Real estate owners are allowed to reduce their taxable income by a deduction for depreciation (the theoretical wear and tear on a property, even though properties tend to appreciate in value over time). Real estate owners pay nothing for this benefit, which can provide an even greater overall return of their investment by sheltering otherwise taxable income.
- A hedge against inflation – Real estate serves as an effective hedge against inflation. Lease rates and underlying property values typically keep pace with (or exceed) the rate of inflation.
Capital Square strategically sources, acquires, manages and sells real estate on a turn-key basis for investors who subscribe to our low minimum investment offerings designed to provide greater access for more investors, portfolio diversification and the potential for superior risk-adjusted returns.
Do you have any questions about how you can invest in real estate? Discover our Expertise articles to learn more, or contact your financial advisor.