If you can manage your real estate investments carefully and support your existing properties on a regular basis, real estate investments can give you:
Regular income in the form of rents
Several tax advantages
Capital appreciation when you are buying a property whose price is below the real market value
Word to the wise, investing in real estate is not for everyone since mastering the skill of making the most out of opportunities takes time. It also demands a lot of competence, patience and research skills to find the right deals that satiate your needs. It also needs a person to be financially disciplined to invest in real estate.
Let’s take a look at why it is a great idea to invest in real estate:
Investing in real estate acts as a hedge in time of inflation!
No matter how developed the society becomes, the saying, ‘cash is king’ still stands strong! You are investing in securities so that you can reinvest the returns from it in some other securities. Renting out your real estate properties is probably one of the best ways you can have access to a steady source of income. Although you should bear this in mind, buying the right property at the right place is also critical.
One of the best attributes of real estate rental is that the cash you will be getting out of your rented property will be in-sync with inflation. In simple words, you can increase the rent of your property with respect to the increase in the cost of living.
You can buy a property cheap and sell the same high when the market is right!
If we take the example of the stock market, a broker makes money by buying a stock cheap and selling the same high when the time is right. It should be kept in mind that the same strategy will not work for every investor, every time! It is due to the fact that as an individual investor you will be having less leverage about a particular company when compared to that of institutional investors.
Now, coming back to the real estate sector, since most of the time you will be investing in individual residential real estate properties, which could be:
located in different locations
will be of different sizes
will be of different ages, etc.
What one can take away from the above information is that there won’t be a set market for a particular property which is a bonus for you! You can buy cheap by going for ‘foreclosed’ properties, flip it a bit by doing the necessary repairs/renovation, hold on to it and when the time is right, sell the same at a higher price!
A properly maintained property gives better returns minus the risks at the end of the day!
Let’s talk about mutual funds whose risks increases with respect to the conditions of the stock market. As per statistical data, it is seen that investors are not masters when it comes to grabbing the opportunity so that they can support a balanced portfolio.
In simple words, investors, most of the time, sell and buy securities at the wrong time leading to losses especially when bargaining scopes are sparse. On the other hand, the real estate sector is a more disciplined area of investment where impulsive buying/selling decisions are rare! An investor has access to more tangible facts and figures when they are looking at a property. On top of that, a real estate property needs to be in possession of an investor for a few years so that they can gain the maximum profits from selling it when the time is right!
To sum it up, if you maintain your property, hold on to it patiently and sell just when the market value of the same is higher than the amount you have invested, your risk of enduring losses are next to null!
Investing in real estate is better than other securities since it is devoid of risks, doesn’t depend on the conditions of the stock market, rental income goes up with inflation and one can get their hands on a lot of tax benefits. All in all, people who invest in real estate are on the right track towards building their wealth!