Control
In real estate, you have greater control over the direction and success of your investment. Investors in the stock market depend heavily on the management of the companies they invest in.
However, real estate investors have demonstrated the ability to impact their properties ' success or failure through direct management of their properties or by overseeing the operations of their property managers. Investors can boost returns by reducing vacancies, marketing to potential tenants, renovating and adding value to their properties, and undertaking various other strategies to increase cash flow and force appreciation.
Demand
After oxygen, water, and food, shelter is our most basic need. No matter how low the stock market goes, people will still need a place to stay at night. As we mentioned earlier, multifamily demand continues to grow year after year. As a result, there is more cash flow and less vacancy, and concurrently there is a countercyclical resistance to economic downturns.
When homeowners or renters downsize,
they often choose to move into multifamily properties. Having a steady cash flow from renters can not only sustain you in a recession, but it can also allow you to take advantage of the discounted assets that will inevitably come onto the market during this period.
Diversification
Within the world of commercial real estate, one can diversify by investing in different types of properties like shopping, retail, selfstorage, multifamily, etc. Multifamily, in particular, is an excellent alternative to traditional stocks and bonds, owing to its ability to withstand recessionary pressures, resistance to stock market volatility, steady cash flow, and potential for asset appreciation.
Predictable Cash Flow
Regardless of whether you acquire a rental property in the multifamily sector, retail, industrial, or shopping, you will benefit from regular cash flow from tenant rents. Cash flow is an excellent benefit on its own, but when used to leverage new property acquisitions through financing, it can be a substantial driver of short and longterm profitability.
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After oxygen, water, and food, shelter is our most basic need. No matter how low the stock market goes, people will still need a place to stay at night.
Deferrable Gains
A 1031 Exchange allows commercial real estate investors to defer paying taxes on their gains and instead use that capital to invest in other projects. The 1031 Exchange is named after Section 1031 of the tax code, which allows individuals to sell assets and carry their basis into a new property of equal or greater value. Using the existing tax code, investors can sell investment properties and buy new ones, deferring taxes until the property is sold, or until they engage in another 1031 exchange.
Conclusion
Real estate is a good investment because it brings investors stable cash flow, appreciation potential, tax benefits, and may act as a shelter during recessionary times.
The benefits described above are also available to accredited investors and even to those who are just getting started in wealthbuilding.
If you’ re looking to get involved yourself, Blue Ocean Capital, offers access to private market real estate, making it possible for qualified investors to access the returns once reserved for institutional investors.
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