Real estate investing can be a valuable addition to an investment portfolio, offering a number of attractive benefits including potential for higher returns, diversification options, and tax advantages.

Real estate is a "total return" asset class, meaning investors benefit from both capital appreciation (as the properties grow in value) plus current income (from rental cash flows). This can be a powerful wealth-building combination, particularly if rental income is reinvested in purchasing additional real estate investments.

In the U.S., real estate property prices and rental income have historically outpaced inflation, meaning real estate has the potential to provide a hedge against inflation. This is particularly true of residential real estate investments, since housing costs makes up a large portion of the core price index (CPI) typically used to calculate general inflation.

Additionally, there are tax advantages associated with real estate investing that can help to offset some of the associated costs. These include the ability to depreciate real estate investments for tax purposes. If you're investing in REITs (defined below), you benefit from the REITs "pass-through" status, meaning you don't pay income tax twice on dividends, unlike the dividends you might earn from investing in stocks.

Finally, real estate provides a powerful way to diversify away from stocks and bonds. Real estate has historically been less correlated with stock prices while providing a similar (or better) long-term return. This could mean that adding real estate to your investment portfolio could reduce volatility while maintaining higher long-term returns.

Before you start investing in real estate, it is important to remember that no investment comes without risk. Investing in real estate requires familiarity with the local market (or investing with professionals that have experience in that local market). Additionally, investors should be aware of their own financial limits and have a plan for managing potential losses.

Although there are some inherent risks involved, real estate can be a viable investment option for those looking to diversify their portfolios and potentially earn higher returns than traditional investments. With research, planning, and the right resources, real estate can be an excellent way to grow your wealth. By investing in rental properties, investors may find themselves with a steadily growing income stream as well as potential appreciation of property values over time.

For these reasons, many investing experts agree that most investors should allocate at least 5% to 25% of their portfolios to real estate investments. However, there is no one-size-fits-all recommendation, and you should determine the right mix for your individual needs and goals.

Single-family rental (SFR) investing is a type of real estate investment that involves buying homes, renting them out, and collecting rental income.

Demand for renting SFR units is surging as many families value the benefits of having more space and features like private garages and backyards, but aren't ready to buy their own home. For these renters, SFR units offer a great alternative to living in apartment buildings. As a result, single-family rental investments tend to benefit from lower vacancy rates on average vs. apartment buildings, leading to higher rental revenues.

As a result, SFR investing has grown in popularity among both professional real estate investors and individuals.

However, the traditional method of buying one property and managing it yourself is notoriously difficult and requires being able to invest large sums of capital. Luckily, investors can now invest in a diversified portfolio of high-quality SFR assets with a smaller investment size by joining GoodRoots.

Core real estate investing is a type of investment strategy that focuses on the acquisition and management of high-quality, income-producing properties. It involves buying well-located, well-maintained properties with long term potential for appreciation and cash flow. These properties are in high demand from renters, meaning the properties benefit from lower vacancy rates, higher rents and less tenant turnover.

Core investment strategies often use little or no debt, meaning the properties are less likely to default. Although Core investments are less likely to provide large profit windfalls compared to other strategies, they are considered to be the least risky types of real estate investments.

Other real estate investing strategies (often called "opportunistic" or "value-add" strategies) involve taking more risk. Examples of riskier strategies include development & construction projects, rehab projects, and fix-and-flip investments. Oftentimes, investments that fall into these risk categories are not ideally located, or they require significant capital improvements to make the property an attractive investment. In addition, these investment strategies typically incorporate significant amounts of debt to acquire the properties. This extra leverage may boost the potential profits but could also lead to severe losses for investors. In the worst of scenarios, real estate investments that use leverage can result in a foreclosure, whereby equity investors are totally wiped out.

In summary, Core real estate can be an attractive, lower-risk investment that still gives investors the upside of rising real estate values in the most desirable real estate markets, without taking excessive risk.

GoodRoots Community Funds^TM take the traditional real estate investing model and make it work for our local communities. Residents in our Community Funds^TM earn home equity rewards while they rent, putting them on the fast track to homeownership. We also provide financial education, handy personal finance tools, and homebuying guidance to help our residents along the way. So when you join the GoodRoots platform, your investment creates tangible social impact for your community while targeting above-market returns.

While no investment in real estate equity can guarantee the safety of your investment, GoodRoots homes are intended to provide a viable, low-risk option for Residents who want to build equity over time.

‍In order to minimize the risk of loss for our investors and Residents, GoodRoots does not use any leverage (such as mortgages) to acquire properties. This eliminates the risk of defaulting on a loan and reduces our costs to acquire new properties since we will not have to pay loan origination fees or other financing costs.

‍In addition, GoodRoots focuses on acquiring high-quality rental properties in highly desirable infill neighborhoods. These neighborhoods provide access to (a) major nearby job centers, (b) attractive amenities, and (c) high-quality schools. Not only are these areas in high demand, but they are insulated from new housing supply, further protecting your investment. We believe these factors will lead to superior downside protection relative to other real estate investing alternatives, protecting both Investors and Residents.

The primary financial benefit of homeownership is long-term wealth generation due to home price appreciation. In the U.S., on average, home price appreciation has averaged 5-6% per year. However, for renters saving up to buy a home, this housing cost inflation causes financial stress, as they must keep up with rising home prices just to maintain their purchasing power. No wonder many Americans living in high-cost housing markets feel like homeownership is out of reach.

With GoodRoots, Residents are able to contribute their home savings into their home, thereby allowing them to benefit from home price appreciation and protecting them from rising housing costs while they save. For typical Residents, we think this could reduce their timeline to homeownership dramatically.

Of course, real estate prices don't always go up. While GoodRoots Residents may face losses if the value of their home declines, but this would also mean the home has become more affordable for them to buy. This may mean their "timeline to homeownership" has remained the same, or even sped up. Thus, contributing additional equity to their GoodRoots home over time can be a powerful hedge against rising home prices for Residents.

GoodRoots invests in high-quality residential properties in desirable urban infill neighborhoods. While our current focus is market-rate rental properties, GoodRoots may consider investments in subsidized affordable housing in the future given market trends and the attractiveness of such investments.

The GoodRoots Seattle Community Fund will be live in 2023! Spots will be limited - submit your interest to become an early-access Investor.