Real estate refers to property, land, buildings, or natural resources that hold value. Investing in real estate can be a significant and advantageous financial strategy for many reasons. Throughout history, many intelligent and famous individuals have recommended that others invest in real estate because of its unique characteristics and potential benefits compared to stocks or bonds.
As with any investment, investments in real estate requires the evaluation of the potential risks and benefits of a particular transaction. But that doesn’t mean a few words can’t help real estate developers and investors. In fact, real estate investing is an extremely emotional pursuit. Between investor swing moods that may drive the market to the risks that are involved with investing, emotions can sometimes run high.
So many quotes from some of history’s smartest people show why real estate could be one of the best ways to increase wealth. We collected quotes from some of history’s greatest minds, including Warren Buffett, Mark Twain, and Teddy Roosevelt.
Each famous individual had their own reasons for recommending real estate as a prime choice of investment. It is also important to note that real estate investments are typically illiquid assets, involve risk, including a risk of loss of invested capital, and may not be the right asset class for every investor.
Good real estate investment can be a valuable addition to your portfolio. There are various ways to invest in real estate, each with its unique benefits and risks. As with any investment, seeking guidance from a financial advisor or real estate expert is always a good idea. An expert can help you make informed decisions and build a robust real estate investment strategy.
We break some of them down here.
Tangible Assets
Real estate is a physical asset that you can see, touch, and control. Unlike the stock market or bonds, which primarily exist in digital or paper form, buying and selling real estate provides a sense of security as it is a tangible property that for a limited partner investor, has the potential to generate income, or appreciate value.
● “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” - Franklin D. Roosevelt, U.S. President.
● “It is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can’t fly away.” - Anthony Trollope, novelist.
The Potential for Stable Appreciation
Real estate has the potential to appreciate over time, meaning its value can increase. While there are market fluctuations, historically, real estate prices have shown an upward trajectory in the long run. By investing in real estate, you may benefit from this appreciation, allowing you to build wealth as the property’s value increases. This appreciation can lead to capital gains, allowing investors to profit from the increased value of the property. Although there is risk here and positive returns are not guaranteed, others agree:
● “Buy on the fringe and wait. Buy land near a growing city! Buy real estate when other people want to sell. Hold what you buy!” - John Jacob Astor, real estate and business mogul.
● “Buy land, they’re not making it anymore.” - Mark Twain, writer and humorist.
● “If you’re not going to put money in real estate, where else?” - Tamir Sapir, business mogul.
Building Wealth
Building wealth generally refers to the process of increasing one’s net worth over time. It involves accumulating financial assets and investments that grow in value, generating income, and increasing that individual’s overall wealth. The goal of building wealth is to achieve financial independence, have the means to meet both short-term and long-term financial goals, and have the freedom to pursue the lifestyle desired.
● “Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” - Andrew Carnegie, billionaire industrialist.
● “Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.” - Theodore Roosevelt, U.S. President.
Generate Rental Income
Not only does real estate potentially rise in value over time, but it can generate consistent cash flow through rental income. By purchasing a property and renting it out, investors can generate monthly income, which can contribute to overall investment returns and provide a steady stream of revenue. Of course. this is not without risk as rental income is dependent on market conditions and the supply of competing real estate.
If you don’t have the funds or confidence to jump straight into real estate investing for yourself as a limited partner investor for a particular property, you can always begin with Real Estate Investment Trusts (REITs.) That’s a company that owns, operates, or finances income-generating real estate. It is a type of investment vehicle that allows individuals to invest in a portfolio of real estate assets without directly owning or managing the properties themselves.
REITs primarily invest in income-generating types of real estate, such as commercial properties (office spaces, retail centers, hotels), residential buildings (apartments, condominiums, or single-family homes), industrial properties (warehouses, distribution centers), or specialized sectors like healthcare facilities or data centers.
● “Landlords grow rich in their sleep without working, risking or economizing.” - John Stuart Mill, political economist.
● “I still think buying a home is the best investment any individual can make.” - John Paulson, billionaire.
● “Some people look for a beautiful place. Others make a place beautiful.” - Hazrat Inayat Khan, spiritualist.
Community Involvement and Improvement
Real estate investment can play a significant role in increasing community involvement. Real estate investors have the power to contribute to community development and revitalization. By investing in properties and undertaking development projects, investors can transform underutilized or neglected pieces of land into vibrant spaces that benefit the community. This could involve building residential complexes, commercial spaces, parks, community centers, or other facilities that enhance the neighborhood’s overall quality of life.
This type of investing often goes hand in hand with job creation. Developing or renovating properties requires construction workers, architects, contractors, and various skilled laborers. As investors engage in real estate projects, they create employment opportunities within the community, promoting economic growth and stability. Job creation not only benefits individuals who secure employment but also contributes to reducing unemployment rates and poverty levels.
● “In the real estate business, you learn more about people, and you learn more about community issues, you learn more about life, you learn more about the impact of government, probably than any other profession that I know of.” - Johnny Isakson, U.S. senator
● “To be successful in real estate, you must always and consistently put your clients’ best interests first. When you do, your personal needs will be realized beyond your greatest expectations.” - Anthony Hitt, real estate professional.
Diversification and Inflation Hedge
Investing in real estate can help diversify a portfolio composed primarily of stocks or bonds. Real estate generally exhibits a low correlation with stocks and bonds, meaning its performance may not closely mirror the economic trends affecting those asset classes. This diversification can mitigate risk and potentially enhance overall investment returns.
Real estate is also considered a hedge against inflation. When inflation occurs, the value of money decreases, but real estate values tend to rise, allowing investors to maintain their purchasing power and potentially benefit from increased property values. However, there is the risk that inflation causes costs such as insurance or payroll to increase, lowering the operating income of a rental property. Many famous investors and wealth-builders have been bullish on real estate:
● “Don’t wait to buy real estate. Buy real estate and wait.” - Will Rogers, actor.
● “Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.” - Marshall Field, entrepreneur.
● “The best investment on Earth is earth.” - Louis Glickman, real estate investor.
● “I have always liked real estate; farm land, pasture land, timber land, and city property. I have had experience with all of them. I guess I just naturally like ‘the good Earth,’ the foundation of all our wealth.” - Jesse Jones, entrepreneur.
REITs typically hold a diversified portfolio of real estate assets across different sectors and geographic locations, which can provide investors with broad exposure to the real estate market. This diversification helps reduce risk by spreading investments across multiple properties and markets.
Choose the Right Strategy
Approaching real estate investment with the right strategy and mindset is crucial. Investing in real estate properties is generally a long-term endeavor, given the illiquid nature of the asset class.. A strategy helps you plan for the future and consider factors such as exit strategies, property management, financing options, and tax implications. It provides a roadmap for long-term success and helps you navigate changing market conditions and economic cycles.
● “Games are won by players who focus on the playing field—not by those whose eyes are glued to the scoreboard. If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so.” - Warren Buffett, billionaire investor.
● “Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values, and the least risk.” - Armstrong Williams, entrepreneur
Be Patient
Real estate investment requires a patient and disciplined mindset. It is important to approach investments with a long-term perspective and avoid making impulsive decisions based on short-term market fluctuations. Developing a patient and resilient mindset helps you weather potential challenges and stay focused on your investment strategy.
● “A funny thing happens in real estate. When it comes back, it comes back up like gangbusters.” - Barbara Corcoran, real estate investor.
Stay Humble
It can be easy to think you know all the answers. But the truth is that real estate markets can be complex and vary significantly based on location, property type, and economic factors. A well-thought-out strategy includes thorough market research and analysis. Understanding the local market trends, demand-supply dynamics, rental yields, and investment potential is crucial for making informed investment decisions.
● “In my experience, in the real-estate business, past success stories are generally not applicable to new situations. We must continually reinvent ourselves, responding to changing times with innovative new business models.” - Akira Mori, real estate developer.
Conclusion
Approaching real estate investment with the right strategy and mindset is vital. Doing so helps you evaluate risks, achieve your financial objectives, navigate market complexities, and stay disciplined in the face of challenges. With a well-defined strategy and the right mindset, you can increase the likelihood of success and optimize your potential risk-adjusted returns.
Hopefully, these quotes will help prospective investors and veterans alike get there.
Disclaimer
The quotes provided are the opinion of the person being quoted, and their inclusion in this article should not be construed as an endorsement of or by RealtyMogul or its affiliates. Nothing in this article should not be regarded as investment advice, either on behalf of a particular security or regarding an overall investment strategy, a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised, and we recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any real estate investment.