Recently I read a Forbes article that said those who have considerable wealth entering 2023 will favor purchasing real estate investments, particularly “legacy” properties – second homes that will diversify their portfolio and allow their families to enjoy the investment.
I couldn’t agree more! Some interesting facts below as to why:
Real estate can provide a more stable and predictable cash flow than stocks.
Our vacation homes are a perfect example of that! We have years of demonstratable data that allows our local rental companies to make solid projections on what a cabin can earn in a given year. And we’ve seen how those same cabins can be flipped for a strong return that the seller can invest in something larger in order to increase their monthly cash flow or even invest into something else that makes money!
Real estate has lower risk and offers a better return when the right purchase choices are made.
Of course, it’s important to buy the correct cabin when making an investment, as there are cabins in our area that don’t make money. Knowing the difference between a true vacation home and one that can serve as a source of passive income is the key to turning your purchase into an investment. Given the volatility of stocks compared to the housing market, real estate overall is considered by most to be a safer investment. While it’s true that stocks can see greater returns than the real estate market sometimes, it’s also true that if the stock market turns, it can be more difficult to recoup your losses. We have seen vacation cabins continue to generate income even during down times in the housing market, giving our cabin owners time to recoup the investment of the property and then be able to sell it when prices are high again.
Real estate can be a source of tax deductions.
The vacation cabin market here is one of the strongest real estate opportunities for investment of any vacation region in the US, and it offers a number of other positives beyond just the passive income. Like most real estate, it provides tax deductions, helps build equity in your portfolio, and can be one of the best tools against inflation.
If buying a vacation cabin is something you have always dreamed about, talk to your CPA to see if the idea is right for you. Then when you’re ready, come visit us so we can help you find the perfect cabin for building that legacy investment for you and your family!
