Real estate is an excellent way to build generational wealth, from the tax advantages it provides to property appreciation. It happens to be one of the assets that sees renewed interest when the stock market struggles, but real estate is not a short-term strategy. It also doesn’t cease being a viable wealth-building tool when the stock market does well.
Regardless of market conditions, real estate can help people build wealth. And while it is sometimes thought of as a way for the already-wealthy to pass generational wealth to their children, it isn’t an absolute necessity to start from a place of wealth. Even those who have relatively little can use real estate to build a legacy.
Here are tips from experts for building generational wealth through real estate.
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Real Estate Is an Inflation Hedge
When inflation runs high, real estate can act as an inflation hedge. That’s important because cash loses purchasing power over time, and real estate can help lessen the impact of inflation.
According to Kathleen Peddicord and Lief Simon, founding publishers at Live and Invest Overseas, “Real estate is an inflation-hedged investment, so over time it should hold its value in real terms if not actually appreciate in real terms.”
In other words, real estate isn’t like cash; its value doesn’t decline from one year to the next. Of course, the condition of the house matters, as does the local market, but the value can increase with inflation or even appreciate.
Real Estate Provides Flexibility
One of the great things about real estate is it gives you a lot of options. A house can be many things, not just the place where you and your family live.
Giri Devanur, CEO at reAlpha, pointed out that a house can be used as a short-term rental or a long-term rental or it can be sold. Flipping homes and selling them at a profit is one strategy, although that is more short-term than generational.
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Using Leverage To Maximize Wealth-Building
The equity that homes provide means they are assets that can be …….