Friday 8 January 2016

Investing In Real Estate: The Advantages and Disadvantages



It is true that because of the significance that real estate holds in the present scenario, an investment in real estate hardly ever goes wrong. However, I am not stating that it never goes wrong. Real Estate cannot be considered as the safest form of investment, neither is it the most risky. It stands on neutral ground.

The risk that you might be undertaking is stepping into real estate investment turf without the aid and advice of an experienced realtor or know-how of the field. It is imperative for you to know the advantages and disadvantages of real estate so that you are aware of where you could go wrong and therefore, avoid such situations.

3 Tips for Successful Real Estate Investing by Jeff Adams

3. Depend on Expert Advice
No matter how much you have read up about real estate, if you are new to the waters, you shouldn’t trust the depth too easily. Always solicit the advice of an expert realtor with every decision, especially when you are in doubt because experienced realtors know the different trends prevailing in the field of real estate, that tend to change from time to time.

2. Set a Budget
Always set a minimum and maximum realistic value that you can spend on your investment. Besides your budget, it is also good to be prepared at the outset as to the square footage, number of rooms and proximity of the property to prime geographical locations that you are looking for.

1. Do not base Investments on Assumptions
Real Estate Investment works on a thorough study of the property, trends in the market as well as research. You cannot operate real estate investment on assumptions, that is, you cannot assume that there will be no change in tax laws, or the price of a property will appreciate or will depreciate.

The most important thing that you should bear in mind is keeping your real estate investments profitable. You should begin with an investment where you are certain that you will either break even or make a profit. Do not opt for dilapidated properties at the outset of investing because you do not know the expenditures you will incur in making the property worthy of re-selling or renting. Also, do not opt for properties involved in legal battles; this is leaving aside foreclosed properties.

Real Estate comes with its advantages and disadvantages and if you know each factor well, you will be able to successfully conquer the real estate game and soon come to be a real estate investor that others entering the field will trust for advice.

The Advantages of Real Estate Investing

1. You can make a significant profit
Real Estate Investing is such a field where profits can touch the skies. If you manage to invest in a property when the market rates are low, you have struck yourself a good deal right there. Once the market value of the property appreciates, you can make sell it off, thus, raking in the big bucks as profits.

Putting the property up for rent is also a good option to make a profit because instead of acquiring your amount once and for all through sale of the property, you receive your money in timely, stable installments.

You can find property at a low price when it is a foreclosed property, the owner is desperate to sell the property because he is moving or for other personal reasons, the property needs a little repair or there is no one to claim ownership of the property.


2. Real Estate Investing Acts as Additional Income
Besides the money that you gain from your job and profession, you can use the money that you gain from your putting up your real estate investment on rent as a second income. Thus, you are one step closer to all your dreams because of this increase in income.

3. Getting a Loan is Easier

When you want to apply for a loan to make any purchase, you are asked to provide your income statement to a financial institution. On seeing your high income, that is a joint sum of your salary and investment gains, the process of loan sanctioning occurs faster because you are finally sound.

4. It Benefit the Generations after You
A real estate investment is not only beneficial to you, but also for your generations to come. If you sell the property, you can fund your children’s plans with that amount. If you rent the property, you can leave that property to your children who can then enjoy the rent amount after you.

The Disadvantages of Real Estate Investing


1. First Time Investor
Usually when you are a first time investor and your income is not too fancy; banks hesitate on giving you a loan. This may delay the process of acquiring a loan.

2. Debt from Loans
A new investor may not have enough resources to make his entire payment while buying property. Thus, he may have to depend on a loan, which causes debt for him and debts are never pleasant.

3. Legal Hassles
Real Estate Investment comes with legal procedures and formalities which require a lot of running about, time consumption and expenditures.

4. Rental Property Upkeep
When you rent your real estate property, the maintenance of the home depends on you. Hence, you have to incur the expenditure on the repair and maintenance of the home to ensure that your home is pleasant enough to attract prospective customers.

Considering both the advantages and disadvantages of real estate, you come to realize that you cannot really take a stand, but the biggest advantage that benefits an investor is the demand of real estate in today’s times considering the number of people who want to have their own home.

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