Despite mortgage rates, many experts still believe real estate stands strong as a wise investment, often outpacing other assets like gold, cryptocurrency, and more. While some investors are jumping into the excitement of new asset classes like art, classic cars, or even wine, real estate remains a reliable choice for building long-term wealth.

If you’re feeling a bit overwhelmed by all the investment options out there, you’re not alone. The key to selecting the right investment strategy is aligning it with your financial goals, budget, risk tolerance, and how much time you’re willing to commit to understanding the market. Real estate, in particular, has advantages that make it appealing for both first-time investors and seasoned professionals.

The Case for Real Estate Investment

The Benefits of Buying Real Estate

Real estate has consistently offered attractive returns. While home prices haven’t appreciated as rapidly as the S&P 500 year-over-year, over the last five years, real estate has shown a solid 26% return since 1975, according to Realtor.com. Many homeowners are also sitting on record levels of equity, with the National Association of Realtors® reporting that the typical homeowner has gained at least $147,000 in wealth over the past five years.

Unlike traditional investments like 401(k)s or ETFs, real estate offers an extra layer of wealth-building potential. Real estate investors can actively shape their returns by renovating properties, adjusting rental rates, and even taking advantage of tax deductions like mortgage interest and depreciation. As Dan Reedy, a real estate investor and broker, points out, “It’s not just about growing wealth; it’s about growing wealth you can control.”

Additionally, as Sara Levy-Lambert, VP of growth at RedAwning, mentions, real estate offers a mix of passive income, stability, and equity-building that many other assets can’t match.

Challenges of Real Estate Investment

While real estate offers strong growth potential, it’s not without its challenges. If liquidity is a priority—meaning you want to access your funds quickly—it may not be the ideal option, as buying and selling homes can take months or even years. Furthermore, upfront costs can be significant.

However, for homeowners with strong equity, leveraging that value through a home equity loan or line of credit (HELOC) can open up new investment opportunities. That said, it’s important to fully understand the costs involved, expected income, and time horizon needed to make a profit.

For those who prefer to be hands-on, real estate ownership offers full control over tenants, property management, and renovations, but it also brings the responsibility of maintaining those properties.

Real Estate Investment Trusts (REITs): A Flexible Option

If direct property investment feels out of reach, REITs are another way to enter the real estate market without the burden of property management. REITs allow you to invest in real estate portfolios—comprising both residential and commercial properties—by buying shares in real estate companies. As Levy-Lambert explains, “REITs offer easy, flexible access to real estate returns without the management headaches, and you can trade them like stocks.”

REITs are also a great way to diversify your portfolio without needing a large upfront investment or the capital for a down payment. Plus, the IRS requires REITs to pay out at least 90% of their income as dividends, so you can enjoy a steady income stream while still benefiting from the growth of the real estate market.

Other Investment Options: How Do They Compare?

Cryptocurrency: High-Risk, High-Reward

Cryptocurrency has made a splash in recent years, with Bitcoin skyrocketing from less than a penny in 2009 to over $88,000 today. However, the volatility of the crypto market is well-documented. As Harry Turner of Sovereign Investor says, “Cryptocurrencies are notoriously volatile, subject to speculation, and witness frequent bubbles and crashes.” For investors with a high-risk tolerance, crypto could offer big rewards—but it comes with a significant risk of loss.

Gold: A Stable but Tangible Asset

Gold has long been considered a safe haven, especially during times of economic instability. Unlike stocks, gold often holds its value and can act as a hedge against market volatility. However, if you choose to invest in physical gold, there are challenges to consider. Not only is it cumbersome to store and insure, but selling gold can be tricky, and you’ll face higher capital gains taxes compared to other assets.

Alternative Assets: Cars, Art, and Wine

Tangible assets like classic cars, wine, and art have become increasingly popular as alternative investments. While these markets can offer substantial returns, they also come with high barriers to entry, both financially and in terms of knowledge. Niche markets like these can be volatile, with value fluctuating based on demand, interest, and even weather conditions for wine.

According to Dan Reedy, “The occasional blue-chip wine or NFT might pay off big, but real estate lets you sleep at night while building long-term wealth.”

Conclusion: Why Real Estate Stands Out

While every investment comes with its own set of risks and rewards, real estate offers a unique combination of stability, income generation, and long-term growth potential. Whether you’re looking to buy a property, invest in a REIT, or leverage your home equity, real estate remains one of the most reliable ways to build wealth over time.

At Linda Trevor & Co. of Compass, we specialize in guiding our clients through the real estate market, helping you navigate everything from buying your first home to building a successful investment portfolio. If you’re considering real estate as an investment, we’re here to help. Contact us today to discuss your options and start building your future.

Let us help you make the smart choice for your next investment!