5 Major Advantages of Investing in Real Estate

Did you know that only 5% of North Americans are financially independent when they reach retirement age? The other 95% are dependent on friends or families to make ends meet. If you envision a comfortable lifestyle during retirement with the proceeds from your Social Security checks but don't manage to save a good portion of your income before retirement, you'll definitely need another plan if you expect your social security checks to maintain your lifestyle later in life. You're going to have to either continue working well past retirement age or have an extreme leading meager lifestyle until your death.

So now that you know the bad news about the majority of Americans, I'm going to help put you in that small 5% category. Below are my top five reasons why to invest in real estate:

1) Appreciation

Real estate values have experienced a steady increase in value for the last several years. This appreciation is due to the overwhelming demand for real estate. Besides serving as a basic human need for shelter that everyone on the planet must satisfy, several other factors are working to increase the demand for real estate.

2) Leverage

Leverage the use of borrowed funds to finance the purchase of an asset leverage basically allows you to use other people's money to buy more properties. Real estate investors use leverage to increase their purchasing power and finance investments that they cannot pay for otherwise. Leverage also allows investors to earn a higher return on their equity. For example, leverage allows you to buy a $1 million property with only $200,000 down. How else could you buy a million dollar asset for 20% down? Try duplicating this type of purchase with your company's 401(k) program or buying stocks in the stock market. You just don't have the same type of leverage that you do with real estate.

3) Tax Savings