Home values increase about 4% on average year over year. What’s great about real estate is you typically only need to put down a fraction of the total value (for example 20%) and can use leverage (a loan) to own the entire house taking advantage of this increase.

You can also force appreciation by investing your own time or money to renovate parts of the property.

A good investment property will bring in money each month instead of an asset such as a car that costs money to own and operate. You will usually have money left over from the rental income after paying for the mortgage, repairs, and other monthly expenses.

This helps to take the emotion out of buying real estate. If the cash flow isn’t going to offer a high enough return on your initial investment, then you don’t have to make that offer.

Every time you make a mortgage payment you are paying a portion to the principle balance lowering the cost of what you owe and increasing your net worth. This compounds exponentially over time as the percentage of your payment that goes towards interest on the loan decreases and the percentage that goes towards the loan balance increases.

For rental properties, it is likely that your tenant’s rent checks will cover your mortgage payment.

Real estate is one of the most advantageous investments within the tax code. Not only can you write off your expenses, but you can claim depreciation as the property degrades over time. You may also be able to take advantage of tools such as a 1031 Exchange to reduce your tax burden when selling the property for a profit.

*I’m not a tax expert so be sure to consult with your CPA for all tax related matters.

Real estate can be a good place to put your money if you are worried about inflation. Historically year over year price increases have trended with inflation. In essence, if inflation increases, then the rate of home value increases will rise as well.

Also, if you are paying rent then your rent may increase over time. However, your loan payment on a fixed rate mortgage will not increase and you can increase your tenant’s rent payment as your expenses rise with inflation.