Paradoxically, as the stock market is reaching record highs, fewer Americans are investing in it in any form.  That has continued for years, a creation of The Great Recession and the meltdown in the securities markets, both stocks and bonds.  This trend highlights the attractiveness of real estate investing as Paul Wiseman noted in a recent Associated Press article.

 

In his Associated Press piece, "Wealth effect of stock market hasn't helped some,"  Wiseman wrote that, "Housing has a bigger bang for the buck because it is the main source of wealth for middle class families..."  That sentence is a must-read for all investors as it sums up why real estate investing has proven to be superior to all other forms: over the last two centuries, gains from real estate have created about 90% of the world's millionaires.

Due to the sophisticated real estate market in the United States, individuals can now passively invest in a wide range of transactions: foreclosures, flipping properties, buying turnkey properties, small apartment buildings; or for those who want to profit from real estate but not actually own it, there are private mortgage notes (loans from investors to finance the buying of real estate).  Passive investing in these real estate assets for the long term is the best way for "middle class families" to profit from real estate.  

To help convert "middle class families" to that select group of real estate millionaires, holding the properties in a retirement account will increase the net return.  When real estate such as a turnkey property or a small apartment building is held in a retirement account such as an individual retirement account (IRA), the returns and capital gains are not taxed.  If it is a small apartment building, the rental income is not taxed, either. Should it be a private mortgage note that is sold for a profit, the gains are also tax free.

Although it was not mentioned in Wiseman's article, real estate proved itself over The Great Recession in a way that stocks and bonds could not.  As stock and bonds fell in value over The Great Recession, the level of rental income in the United States actually rose.  Historically, rental income rental income rises about every 5 years in America.  That means that in less than 15 years, the rental income from a property will more than double.

That is one of the many reasons to passively invest in real estate for the long term: to put time on your side.  There will always be a desire to own your own home.  From that basic urge, real estate investing has proven itself over the centuries.  No matter what happens with stocks and bonds, housing will always be in demand, in one form or another.  To gain from that fact of the marketplace, there are many ways to profit from the "bigger bang for the buck" of real estate.