The invention of real estate has brought about a new way in which people can invest their hard-earned money to secure their future. We have seen many people venturing in this sort of business since its invention, and it is multiplying since then.
Not everyone who ventures into real estate finds success, and others may even lose all their money when the tables overturn. That’s why real estate is not for everyone, and you should do your research first before getting to real estate business. Real estate is just like any other business out there, so check the risks to take, profits, and loses to incur.
Why Do People Invest in Real Estate?
- General income – Investing in real estate can be fruitful especially when the projects take the expected positive directions. You can make massive profits from this investment.
- Personal use – You can invest to get yourself a beautiful house in the cheapest way as possible and later on you can sell or lease the remaining units.
- Capital appreciation – Which is the increase in the investment value. In other words, it is the amount in excess after selling a unit from the purchase price of that unit.
The Pros and Cons of Real Estate
Like any business, real estate has its pros and cons. Do you want to invest in real estate? If yes, then you need to check the pros and cons of the investment and consult your financial advisor on the way forward.
Pros of Real Estate
- A steady flow of income – Once you invest in real estate, you’re sure of getting some considerable amount of revenue when you lease the units to tenants.
- Tangible investment – It is an investment that you can see and feel. You can comfortably say “I own that” and this has proven to be very important psychologically. If there are problems, you can just drive-by and see for yourself.
- Fewer fraud cases – Its unlikely to get yourself defrauded in real estate. Since if a situation arises, you can drop by at the investment and check it for yourself and give the go ahead. For instance, repairs of broken units, where you can physically show up, inspect, and do the repairs yourself.
- Value and appreciation – In this investment, you can acquire some units and give it time to appreciate in value, and later on sell it at a higher price.
- Long-term investment – Real estate is a physical investment, and it can add up to your retirement fund.
- Terrific inflation hedge – Real estate protects the dollar from losing its purchasing power over time.
- Safe and comfortable investment – Once the investment is complete, you can sit back and wait for your investment to appreciate no worries. It’s more comfortable for people of middle and lower classes.
Cons of Real Estate
- Time-consuming – It’s not an investment that gives you results in a day. It can take months for you to realize any income.
- Incur costs– If the property is not occupied, you have to use your own money to pay for services such as taxes, utilities, etc. Also, you have to deal with rental tenants as well as maintenance services personally.
- High risks – When you purchase a property that requires a lot of improvements and repairs. And that information was not included in the buying clause or agreement.
- Increased liability – You may be required to incur more costs especially when accidents occur such as fire.
Before you invest, ask yourself what you want to gain from this business venture. By doing so, it will allow you to understand all your roles once you invest.