Investment is a term that seizes the attention of even the least business-minded person in a room. When we hear the term, many of us imagine dollar signs, remember our Economics 101 professor, or picture Scrooge McDuck swimming through his sea of gold coins.
In real estate, we toss this term around often. When someone purchases a home, REALTORS® like to communicate every benefit that comes from owning a home. And since real estate investing is such a desirable option in the Northern Michigan market, we find no reason to hold back our enthusiasm about the opportunities we see.
Investment sparks a lot to think about for a family. While you weigh your options about whether to purchase a house or to throw all your extra cash into the stock market, here are five reasons we think real estate investment in Northern Michigan is the preferred way to go:
If anyone ever tries to convince you of a risk-free investment, run as far from that person as you can, as quickly as your feet will carry you. Investment always comes with some measure of risk. It is part of the game to compare the pros with cons, the risks with rewards.
The great incentive for real estate investment is that it is typically safer than throwing all your cash into a single stock or bond. One way to consider the safety of a real estate purchase is to measure your portfolio through the lens of money you’re NOT spending, just as much as you calculate money spent.
Let’s pretend for a moment that you did not invest your money into real estate. Instead, you tossed every investment dollar into your favorite stock. Even if that stock performs as well as you hoped, you are still paying hundreds of dollars each month to your landlord to keep a roof over your head.
Paying rent might as well be considered a stock investor’s “Living Fee”, because as a tenant, your living expenses are paid to a business. Real estate investors, on the other hand, invest our living expense by paying off a mortgage. We’re putting hard cash into the equity of our property.
To compare apples to apples when it comes to real estate and stock investment, your monthly tenant-related expenses should be subtracted from whatever you earn through your stock portfolio. All considered, something tells me real estate will prove higher returns just about every time.
Not all real estate investments take a long time to show their returns. For homeowners who rent out rooms or their entire house to tenants, paychecks land in their pockets every month to remind us of our good investment.
Landlords are business owners. The most strategic landlords manage to far exceed the cost of their mortgage payments through the income they receive from their tenants. This means that the tenant is not only footing the expense of your mortgage; they are also putting extra cash straight into your pocket.
Stocks pay dividends, but owning a home means a roof over your head, autonomy in your life, and possible extra money in your pocket every month. In other words, real estate is an investment that sees long- and short-term returns.
The long-term returns are the obvious ones: Eventual dollars in your pocket when you sell the home.
Short-term investments include: a physical place to live, the autonomy of owning and designing your own home, and money in your bank account each month if you rent out one of your rooms.
Some economists will try to point to the higher rate of return that is available through the stock market. But what those economists fail to tell you about is the fact that the cash someone needs before taking advantage of those high-percentage return rates is not in the budget of most households. And banks don’t give out “Stock-investment loans”, they give out Home-loans.
The scales are therefore skewed. One can make a $200,000 real estate investment with a little help from their bank, but don’t expect to see the same generosity when you ask a bank for a $200,000 stock investment loan. In the case of stocks, you invest straight from your wallet. Sure, you may have the higher average rate of return, but since you can invest fewer dollars, your money goes a shorter way.
Now we come to my favorite part: I can’t think of a better place to be a real estate agent than in Northern Michigan. Homes in the area are booming. Commercial and residential real estate values are on the climb.
Of course, no investment is without risk. But if you’re going to put your dollars anywhere, the real estate market in Northern Michigan is a smart way to go.
If you are in the market for real estate in Northern Michigan, reach out to a Brook Walsh today. Whether you’re looking for a home in Boyne Mountain, Lake Charlevoix, or some city nearby, our agents know the area best and can help you find the home that fits you budget and your lifestyle. Start building your real estate investment portfolio soon by calling today.
I’d like to help you find the right price and the right time to make your next move a successful one. Send me a message or give me a call at 231.459.3179 to learn more today.