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Why should you invest in Real Estate
Posted by Lorraine Ross on February 18, 2008Compared to other investment instruments, real estate is quite sound. Have you ever stopped to ask yourself the question, “Why should you invest in real estate?” The answers are clear, because if you invest in real estate, your investment is sound, even during times of high inflation.
Of course, this doesn’t mean real estate is immune from the effects of inflation, but that it is less volatile than other investment instruments. For instance, stocks, bonds, and mutual funds fluctuate, and, if you aren’t careful, you can easily lose every dollar you invested. Real estate, on the other hand, will continue to grow, no matter how poorly the economy is faring, though it will grow at a slower rate during times of a depressed economy.
Whether you are buying real estate for rental property or to fix up and resell, you still have a potential for a nice profit. When you buy rental property, you have income from the property each month, less any expenses you may incur, such as management fees or repairs. If you choose to buy depressed properties and fix them up to resell, you will have the profits from those in order to maintain a nice income, provided you invest it properly.
In order to maintain a healthy cash flow, the best thing to do with income derived from real estate is to invest in more real estate. No matter how you look at it, when you invest in real estate, you are investing in a growing market that will continue to grow throughout the 21st century.
That brings up the question again, “Why should you invest in real estate?” The decision to invest in real estate is a sound one if you watch the cards you play. That means you don’t invest in something in a depressed area. A depressed property is one thing, but you are putting your money on the line to choose a property that is a depressed neighborhood. No matter how well you fix your property, if the other properties in the area are not up to par, it’s going to reflect negatively on your real estate. Also, it only makes sense invest in real estate in an area that stands to make money for you.
There are many investment opportunities in real estate, all of which provide sound reasons for choosing to invest in real estate above any other type of investment. When you invest in real estate, you invest in a product that gives you several options: personal use, rental property, fix up for resell. If you work your deals right, you won’t have to use any of your own money to buy properties, especially if you are able to secure some owner financing. The key to making money in real estate is to use as little of your own money as possible and in the case of properties for resale, you want to turn those around as quickly as possible.
Take your time when you choose real estate for investment purposes. There is no need to rush into the final step you need to invest in real estate. Remember when the question was asked, “Why should you invest in real estate?” the answer was because it’s a sound investment if you’re careful. Follow that analogy, and real estate will make you financially secure.
Real Estate is rarely a good investment for the short term. There are too many “transaction” costs, that it is hard to make short term profits unless you can purchase the property for a screamin deal. It is a far better investment than stocks in the long run, especially considering you’re going to pay to live somewhere.
Very insightful thank you.
Buy to let gives you the opportunity to start a real estate empire with minimal work. If you look at the truley wealthy they all own a lot of real estate.
I believe that investing in real estate involves the same kind of risks and advantages as investing in other investment instruments. You need to asses all the conditions and details before investing in anything and real estate makes no difference whatsoever.
Thanks,
Real estate is a good long term investment.but there are too many costs and risk involved like any other investments.
Great article.
As a potential investor, you need to look at environmental factors also. For example here in Vernal Utah there is a huge boom in the industry only because of the investment in shale oil. You can read more about that on our website.
I think for the house you live in it’s a great investment, but I am not so sure it’s as easy as it used to be, at least not here in the UK. But I think if you do it right there is still gold in them thar hills.
Real Estate is a growing market , it’s a great investment , but it’s risky and may cost you much money if you do not have experience .
Real estate investing is the absolute best long term investment. With the average appreciation rate historically being 5% year over year, add in tax benefits and the fact that your tenant pays your mortgage, you can’t go wrong.
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