Is real estate a good investment in 2023?

It’s no secret that investing in real estate is an excellent way to build long-term wealth because property prices tend to appreciate over time. But given the current economic climate, it’s natural to have second thoughts about whether real estate is still a good investment this year.

Historically, the housing market has been the most influential and profitable investment opportunity in the last decade, and even more so in recent years. However, as investors, we also understand that no market stays hot forever. High-interest rates, rising inflation, recession and many other factors may further interfere with our real estate investment decisions.

With all that said… is real estate still a good investment in 2023?

Here are a few reasons why real estate is a good investment this year.

Real estate helps diversify your portfolio

Investing in different asset classes is key to having a well-rounded portfolio. Because when you hear stories about someone’s investments going south, their portfolio lacks diversification. At least, that may be part of the reason. And just looking at market conditions this year, portfolio diversification should be a no-brainer!

I’m a big fan of diversity, and I’ve done a detailed post on it in the past. You can check here. Diversification acts as the perfect hedge against risk. Because when the market fluctuates it can cause some sectors to take a huge hit, while other sectors can still perform surprisingly well and protect your net worth.

For example, a diversified portfolio would include investments in the stock market, real estate, renewable energy, businesses, etc. All these investment types behave very differently and are not necessarily influenced by each other.

So, if the value of one investment vehicle fluctuates, the others will remain stable or even outperform the market. As an investor, review your portfolio as a whole, does it have a good mix of different asset classes?

Real estate is a reliable short-term and long-term investment strategy

No investment is risk free and the same rule applies to real estate. The key to minimizing risk in real estate is doing due diligence.

Whether you want to invest short-term to sell quickly or play the long game by holding on to your property to generate additional income streams, real estate has proven itself to be a reliable short-term and long-term investment. strategy

It offers a wide range of options to choose from, such as actively managing your rental properties, passively investing in commercial real estate syndications, or diversifying through REITs, funds, and more.

Regardless of the path you choose, real estate can help you expand your portfolio and allow you to build significant wealth over time despite temporary ebbs and flows.

Real estate offers better returns on your investment

After you’ve built a solid emergency fund and still have some cash left on hand, what do you usually do with it? Many will think of investing in the stock market. But did you know that investing that amount in real estate can earn you much more?

Records indicate that the Dow Jones average annual return was 4.8% over the past decade, but the average total yield for rental property investors was 7.7% in 2020 alone. Today, that return can be much higher depending on where the property is located!

Additionally, real estate has less correlation to overall stock market volatility and is a tangible asset. So, if you are looking for higher returns, investing in real estate serves as the better option between the two.

If we look at the numbers further, the average return on investment in the US real estate market is 8.6% according to the S&P 500 index. This number is an indicator of the housing market as a whole. When investors understand the performance of different sectors of real estate, they can take advantage of the best returns on their money… for example, 10.5% on residential properties, 9.5% on commercial properties, 11.8% on REITs, etc.

Bonus! – Investing in real estate acts as an investment for your well-being

Investing in real estate is not only a great addition to your investment portfolio, but it can also do wonders for your physical well-being. Having another property can be seen as a landing or vacation spot for you!

It can offer you a change of scenery, a different view to work from home, or a new place to spend time with family and friends.

Having an extra property is a fun way to mix things up a bit, especially when it meets your general well-being.

Should Doctors Invest in Real Estate?

Burnout in medicine is real. No one knows this better than us. Regardless of the specialty you choose, chances are you will have limited free time.

Over time, I realized that having multiple sources of income outside of medicine is no longer a luxury but a necessity. And it’s possible to set up these income streams while managing a full-time career. Several physicians and high-income professionals have done this before and it does not require much active participation.

This is called passive real estate investing. It has the potential to provide a substantial return on your investment, greater financial security and stability, and best of all, puts you back in the driver’s seat—in full control of your time. Now, isn’t that the ultimate goal for many of us?

In conclusion…

Your portfolio is often a representation of your personality and financial objectives. Real estate is not a get-rich-quick scheme but it is a time-tested, reliable strategy that helps you diversify your portfolio and pay off in the long run.

Also, you don’t need to own property to get similar benefits in real estate. So, whether you’re new to investing, have closed a few deals, or are a seasoned pro, there’s something for everyone.

And if you want access to our tried and tested strategies that work and step-by-step guidance to grow your real estate investment portfolio, be sure to check out our in-depth course – Passive Real Estate Academy!

Our waiting list is now open, and you can Grab your seat here! Let’s make it happen!

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