Low risk investment – real estate returns are based on relatively reliable cash flows from tangible assets rather than on price appreciation subject to the whims of market psychology.
- Attractive long run returns: unlevered returns averaged 12% over the last 20 years
- A natural inflation hedge: an inflation increase of 1% raises returns by 2%
- Tax sheltered cash returns for retirement income: depreciation deductions
- Indefinite deferral of capital gains
- Passive tax losses reduce taxes on other passive income
- Low correlation with other asset classes provides opportunity to reduce portfolio risk