Few Reasons That May Change Your Mind While Investing in Real Estate
In today’s tough financial market, very few investors choose to spend their money on real estate. Nevertheless, this doesn’t mean the industry is not profitable. It can be; the key to making money with property investment is to be smart. Think with your head, be prepared, know the market – these are essential aspects you must consider if you want to make a profit. The following guidelines might just convince you that investing in real estate can be a lot more valuable than meets the eye.
Real estate investments bring leverage
Buying property has one major advantage – leverage. This allows investors to attain an increased return on their initial investment. You are advised to use the leverage that you have when buying and managing a property; you can also use it among your tenants. Make a down payment, boost overall return-on-investment, leverage capital – all these can have a notable effect on your initial financial statement.
It’s not that difficult to invest in property
Many people are afraid to invest. They don’t want to buy property and then risk seeing it collapse. Even though that can happen, a smart investor will always have a plan in mind before spending any money. Despite initial floods of paperwork, proper research and a thorough analysis of the market will help you make sensible decisions. The key to success in this business is to sort out your finances. This can be done by researching to find an ideal property. As long as you’re committed to that aspect, you have the highest chances of making a good profit.
Property investments offer “guarantees”
As opposite to some other forms of investment, real estate guarantees that you won’t lose the money you invested. Here’s an example to help you out: let’s assume that you’ve decided to invest $150,000 in the share market – in this case, your guarantees are zero. Nobody can guarantee that the overall value of your $150,000 will remain the same in 5, 10, 20 years from now.
The value of your money can’t be estimated because there’s no way of estimating the cost of inflation. On top of everything, nobody can guarantee that the company you cooperated with will exist in 5, 10 or 20 years from now. In case your investment portfolio drops by 50%, your initial investment would have a lot to suffer.
Investing that $150,000 in real estate, and using it to purchasing 5 units with a $30,000 deposit would bring you $750,000 worth of property, and $650,000 in mortgages. Provided that you collect adequate rent amounts to cover expenses, your 5 mortgages will be paid in 25 years. Even if your property’s value declines by 50% over the following 25 years, your initial $150,000 would still double. If your property burns down, you’ll have a new one from the insurance company. As you can see, property investment does have a certain advantage over other forms of investment, which are not just risky, but also very unlikely to bring you solid profit.
Stability and control
Unlike other forms of investment, real estate offers many growth options, in both value and income. Also, you have complete control over your asset – you choose what to do with it, at any moment. Even though it is accurate that economic conditions are extremely important when it comes to driving property values, nothing can actually interfere with the overall value of your property as long as you take care of it – this means taking care of your tenants, too.
Real estate is not as volatile as mutual funds or stocks, particularly in shaky economic times. Of course, not all markets are the same worldwide, but as far as the US is concerned, things are looking pretty good right now. Share markets demands complicated terminologies very few investors can fully grasp. With real estate, things are relatively straightforward. As far as the strategies are concerned, they’re pretty simple to understand as well.
Capital growth is a vital aspect you must have in mind; after that, you have cash flow and yields. Expert investors can always opt for more advanced tactics such as off-the-plan, wraps and flips; but unless you’re skilled in this business, you are advised to keep it simple if you want to make a profit with real estate investments. You can also explore some good sites over internet like propertyturkey.com to gather information as much as you can.
Category: Real Estate
