There are several reasons I feel real estate is an amazing investment opportunity:
1. Leverage: Real estate debt, or leverage, can be structured far more safely than using debt to buy stocks by trading on margin.
2. Tax free cash flow: Because of depreciation and mortgage interest deductions (if you leverage your capital), your cash flow can be tax-free. You may not have to pay any taxes on the property until you actually sell it, at which time you will pay capital gains tax.
3. Finite: The need for residential, commercial or industrial real estate grows with our expanding population. People will always need homes, office space etc. Economics 101 teaches us that price of any product/commodity is based on its supply and demand. Supply=Demand. The beauty of real estate is that the supply is typically somewhat limited while its demand continues to rise. This characteristic makes real estate, at the very least, a good inflation hedge, if not a great tool to accumulate wealth.
4. Tangible: You can visit your investment property, you can speak with your tenants, and the banks consider it equity. Because of its tangibility, you have a certain degree of physical control over your investment—if something is wrong with it, you can fix it. You can’t do that with a stock or bond.
5. Durability: Unlike a bond, which has a fixed maturity date, real estate does not normally mature i.e. a building can last for decades or even centuries, and the land underneath it is practically indestructible. In many parts of the world, it is not uncommon for investors to hold property for over 100 years. This durability allows you to sell your property whenever you want. As such, real estate can be a great source of passive income—you can purchase and hold the property as long as it continues to make good investment sense.