We are often not happy with our portfolio and want to add more asset classes to it for diversification or better profit margins. However, it’s important to consider your investment plans from different angles before simply diving in.
Nonetheless, real estate can be a profoundly fulfilling and rewarding investment in case you’re tireless and patient to assemble abundance with real estate. Contrasted with customary venture means like the stock exchange, real estate is a considerably less volatile industry notwithstanding the risks and expenses.
From potential rewards and minimisation of risks to challenges which one can face as a real estate investor, here are a few pros and cons of real estate investing:
The pro’s of Real Estate Investment
Real estate appreciates over time-
While investing, you might feel you are not getting as many returns as you anticipated. Well, that’s the beauty of the real estate, it always appreciates over time. There are ups and downs in the market, but they never last for the long term, so rest assured that your investment over time will appreciate. You have to wait for the moment to take the best advantage of it!
A sturdy cash flow-
Whether you are staying in the house, or it is up for rent, the property can provide you with a steady flow of monthly income.
Hedge against inflation –
Inflation is like a pest that can erode the value of your investment. However, one asset class that keeps up with inflation is real estate. If the price of bread goes up, the rent and property value go up as well.
The Cons of Real Estate Investment
But before you jump straight into the investment world, you should be aware that there are certain disadvantages to real estate as well!
It requires money
Forget the old mantra, “You can get rich buying real estate with OPM (Other People’s Money).” While you can buy equity and choose between the higher or the lower-priced one, real estate doesn’t give you that leverage. You need money to make money. A down payment, interest costs, closing costs, there is a lot to consider before you jump into the world of real estate.
Long term investment
If you are looking for quick money, real estate is not for you. You need to spend time learning and managing your real estate investments. It’s a long term investment plan which will reap your benefits later on. Moreover, if you need emergency cash, you have to look for other options. You can’t sell your property overnight as you have to get a buyer willing to offer a reasonable price. It takes time.
It has risks
Every asset class has risks, but real estate has certain unique risks attached to it. From buying the property at the wrong price at the wrong time to accidents or getting stuck in the legal formalities, real estate investment comes at a price.
Real estate isn’t for everyone, but if you have cash and want to maximise your wealth, you should learn to look, analyse, and purchase good real estate deals.
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