Which of the following is an advantage of investing in real estate?

Investing in real estate offers several significant advantages, particularly the potential for passive income, property appreciation, tax benefits, and diversification of an investment portfolio. This multifaceted benefit stems from the nature of real estate as an asset class.

Passive income can be generated through rental payments from tenants, which can provide a steady cash flow. As properties appreciate over time, their value can increase, leading to capital gains when sold. Moreover, real estate investments often come with tax advantages, such as deductions for mortgage interest, property taxes, and certain expenses related to property management and maintenance. This can significantly decrease an investor's overall tax burden.

Additionally, real estate serves as a valuable tool for diversification within an investment portfolio. By including real estate alongside stocks and bonds, investors can reduce risk because real estate often behaves differently from traditional investments during economic fluctuations.

In contrast, guaranteed annual rental income is not always attainable; rental income can fluctuate due to market conditions or tenant vacancies. Exclusive access to luxury properties is not a general advantage of real estate investing as it is more specific and does not benefit all investors. Immediate liquidity is typically a challenge in real estate, as selling property often takes time, and thus it does not offer the same liquidity that stocks or bonds might.