1. Properties increase in value over time

Well-chosen properties increase over time, generally at a rate that far exceeds annual inflation. Yes, there are occasional market corrections and people can buy the wrong type of property at the wrong time. But I have found that there is always a chance to buy a quality property at a discount, make improvements to increase equity and ultimately sell at a profit. It's the real estate industry's equivalent of the stock market mantra of “buy low and sell high.” And real estate always has an intrinsic value. A stock may go down to zero, but a property is a tangible asset which will always have a value derived from both the raw land and the “improvements” (the building structures attached to the land).


2. Real estate has unique tax advantages

In the case of depreciable properties, the ongoing depreciation will help decrease the current tax payment. Most investors make their property investments as company investments, meaning that on exit your gain will be tax-free up your holding company. So are ongoing distributions if you own 10% or more of the company.


3. Real estate provides a stable cash flow

Rental properties can provide a steady stream of monthly revenue called “cash flow.” This is the extra money left over after all bills are paid. Once your property is in operation, cash flow provides ongoing, monthly income that can contribute to ongoing debt reduction, maintenance and dividend payments.


4. Properties allow you to use leverage

Leverage is the use of borrowed capital to purchase and/or increase the potential return on investment. Leverage, when applied wisely to minimize risk, is a powerful advantage when investing in real estate. You thus use the rental income of the property to continuously reduce your risk and increase the value of your investment.


5. Real estate builds equity

When you use the leverage wisely, your tenants are essentially buying the property for you. Rental income pays your loan down each month and builds equity for investors. When you buy a rental property using a mortgage, it is your tenant who pays the mortgage, increasing your net worth every month. Think of it as a savings that grows automatically without you having to deposit money every month.


6. Real estate gives you control

You have much more control over your overall investment success with real estate than with other investment classes. You can't sit in the boardroom and control management decisions that affect the value of the shares you own. With real estate investing, you are in the driver's seat when it comes to many decisions. You can mitigate risks and grow your portfolio at a much faster pace by investing in real estate.


7. Real estate is a protection against inflation

Inflation is the economic reality that prices rise over time due to falling monetary value. The annual inflation rate varies. Right now, inflation is rising and is at its highest level in the past 30 years, according to Statistics Denmark.

Inflation erodes the value of many investments. If your annual gain this year from your stock portfolio is 5.5%, your actual gain was only 1.5% (at 4% inflation), with the purchasing power of your money decreasing with the rate of inflation.

Investment in commercial real estate is keeping pace with inflation. When consumer prices rise, rent and thus property value are regulated. As annual rental income increases, the cost of ownership does not rise to the same degree. As inflation pushes up the cost of living, your cash flow increases. And inflation drives up the value of the property itself.