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At Clear Summit Investments we invest in real estate and we work with investors who invest in our projects. To say that we are convinced that long term investment in real estate has benefits, would be an understatement. In this article, I want to outline what we believe those benefits are for our investors.
Real Estate Investing checks all the boxes as a passive investment. As the great Warren Buffet is credited with saying, “If you don’t find a way to make money while you sleep, you will work until you die”. Passive income is the holy grail of investing, it is what we all aim for in our quest to retire one day or, sooner than that, to gain greater autonomy over our time and our choices in what we do every day. Real estate achieves this in two ways. Firstly, property appreciates in value over time. Depending on the market, appreciation may be fast or slow but history shows us that the value of property does go up over time. Appreciation is typically realized at the point of sale when you sell a property for more than you bought it for. The second way in which real estate generates passive income is through cash flow. By investing in properties that people and companies need and want to use, we create a stable stream of income from renters. For people nearing retirement, the steady income that is generated by a well-managed rental property can be an important aspect of their retirement planning. For those still in the middle of their working life, rents can generate additional income or a flow of capital for making further investments and setting a snowball of wealth creation in motion.
Real Estate provides steady income with low volatility. At the risk of repeating the first point, I want to address a reason why successful investors seek to have a diversified portfolio of investments and why real estate forms an essential part of a diversified portfolio. Anyone who has ever invested in the stock market knows that the combination of short term company or market events and major economic and market trends, results in volatility. Investing in the stock exchange with a long term, well-researched strategy is still a good idea and the returns are worth it but it is not for the faint of heart. In contrast to this, real estate by its very nature does not have the same volatility. In most market segments, perhaps with the exception of lower price segments, people and companies don’t move from property to property in the same way that some stock traders buy and sell positions. Yes, it is important to offer a well-maintained and attractive property to renters in attractive locations, but if you do, they tend to stay and pay the rent. In short, real estate is an important component of a diversified investment portfolio that reduces overall portfolio volatility.
Real Estate investment supports communities and economic growth. Not all people or all companies are able to, or want to, purchase or build their own homes or places of business. Nevertheless, people need places to live and business need places to operate and to provide goods and services to their customers. By providing quality homes, commercial, industrial and logistics properties in communities, real estate investors provide the infrastructure needed for economies to grow and flourish. Of course, government policies that stimulate capital investment and economic growth strategies are important, but it is investors that make it happen! We at Clear Summit Investments are committed to communities and local markets because creating value creates growth which in turn creates wealth for our investors.
“If you don’t find a way to make money while you sleep, you will work until you die”.
I hope that this article was interesting for you. If you want to learn more about Clear Summit Investments or get more information about our projects, please give us a call or use the contact form below.