Investing in real estate is a great way to increase your net worth. Whether you’re looking for your first investment or you want to take the next step in any of your existing investments, there are several reasons why investing in real estate can be a smart move for you. Here are 3 of the most compelling reasons why investing in this asset class can benefit your portfolio and bring greater peace of mind.

Real estate is likely to increase in value over time

Since real estate prices tend to increase over time, investing in real estate is one of the best ways to help your portfolio grow. With that said, you mustn’t view the gains as a “freebie” since this asset class does have its risks.

In particular, most investments don’t increase in value as quickly as real estate does. If you count on the inflation rate being higher than the appreciation rate for most investment vehicles, then you’ll be disappointed.

Real estate provides a solid alternative to stocks

The fact that real estate tends to increase in value over time is enough reason for you to invest in it, but what about the returns? Although real estate can provide solid returns compared with other asset classes, you must be realistic about these returns. There are two types of real estate investors: speculators and long-term owners.

The speculators tend to be those who view real estate as an investment vehicle for short-term gains. This approach can work well for those with a spot on the market that they’re trying to flip quickly, but this is usually a recipe for disaster.

To benefit from the long-term appreciation of real estate, you’ll need to become a long-term owner rather than a speculator. An excellent example of a long-time investor is Aubrey Ferrao. The CEO of Fiddler’s Creek golf Aubrey Ferraro considers the long term when making investment decisions, and he has seen a significant payoff.

Real estate is an investment vehicle with a more significant potential return

Even if you think that real estate is a risky investment, there is some reason to be optimistic about your potential returns. Real estate investors stand to make some of the most significant gains in value in their portfolios. The reason may be because real estate tends to increase in value over time, or it could be that the cost of purchasing real estate has fallen dramatically. The difference between what you pay for a property today versus ten years ago could be substantial.

Real estate can be a great asset class for your portfolio, but you mustn’t get too optimistic about your expected returns. Real estate won’t provide instant gratification for your investment, but it’s one of the few investments that are likely to increase in value over time, so investors should keep this in mind. You should be aware of all of the risks involved in this type of investment, but you should also be aware that there are several reasons for optimism when it comes to your potential returns.