Motley Fool recently published a piece that declared real estate one of the most ethical forms of investing. We have to agree! As the article suggests, real estate investing has garnered a bit of a bad reputation throughout the pandemic. This isn’t because investor experiences have been particularly bad, but because the people they serve have been in increasingly bad situations.
The economic toll of 2020 left hundreds of thousands of rental households worrying about eviction. Their plight means a skeptical eye has been cast the way of owners and landlords. To the outsider, it just looks like rich real estate owners unwilling to budge and taking advantage of their residents.
We know that that’s not the case. Not only has that not been our experience at REI Nation, but it overlooks the valuable and necessary role of real estate investors in the housing market and economy at-large.
Let’s talk about why real estate is not only the more ethical way to invest but an instrumental part of the housing market and economy as we know it.
The Essential Role of Real Estate
Real estate is essential. Period. Even if we go back before times of homes, apartments, offices, and commercial buildings as we know them, shelter has always been an essential need. Some may say that real estate investors take up too much of the market share. They’ll lay blame on investors for a lack of inventory on the market, assuming that investors are snatching up “the good stuff.”
Everyone needs real estate for something: a place to live, a place to work, a place to start a business. What real estate investors do, in part, is create avenues for access. Not everyone can afford a home. Fewer can afford to buy commercial spaces. The model of renting out properties, be they residential or otherwise, allows a wider pool of access.
Not only is real estate part of our essential need for shelter, but it is a key part of our economy. Real estate investors were one of the driving forces behind housing recovery in the wake of The Great Recession. When so many people lost in the battle against foreclosures and others fell underwater on their mortgages, real estate investors returned confidence to the housing market. They bought properties when no one else dared. In the end, this was a huge catalyst in market recovery.
What Makes Investing in Real Estate Ethical
We’ve established that real estate is essential. That, however, doesn’t necessarily make it an ethical investment. Even if you are providing necessary services, you can have an unethical way of going about it. We’re not going to pretend that there aren’t some bad eggs in the world of real estate!
However, there are so many advantages in real estate when you’re striving to invest in an ethical, conscientious manner.
As people in the world, we want to ensure that our time, money, and energy are supporting the right things. While it is impossible to be an entirely ethical consumer, we can help by being informed and intentional about how we invest. So many times, we blindly invest in stocks without knowing who and what we’re really supporting.
As investors, we can’t always know what business practices and ethical violations are involved with big corporations. As a result, we may be unknowingly violating our ethics...and profiting off of things we fundamentally oppose.
Real estate isn’t like that. As the owner, you are at the helm. You control how your business is conducted and with whom. Not only do you experience transparency through personal ownership, but you can work with others who are transparent and honest in their dealings. The ability to vet your partners and communicate with integrity makes real estate an ethical choice.
Supply and Demand
Real estate investors have been characterized as heartless, money-hungry monsters by the culture. The notion is that investors are the ones driving up rental prices to unsustainable highs. This isn’t true. While investors may have some say over what they charge for rent, they, like anyone else, are held to the sway of supply and demand.
Supply and demand drive prices — investors don’t. While it’s easy to lay blame on investors, we know that it is the market, the economy, and legislation that lie at the heart of our affordability problems.
The Right Partners
As a real estate investor, you control who you work with. The beauty of being a real estate investor is that you have full ownership over your investments and how they operate. Because of this, you can vet any partner or vendor and know that you are working with someone whose values align with yours. At the end of the day, we want to provide good homes and excellent service while growing our equity.
Real estate empowers investors to build wealth by providing a necessary service that can be operated with integrity, ethical business practices, and quality at the forefront.
Build wealth with a clear conscience. Your REI Nation advisor is waiting!