5 Pros and Cons of Investing in Real Estate Industry
Any type of property, whether it is residential or commercial, can be a great investment opportunity. It can be your source of passive income, earn you immediate benefits with flipping, or even can be your retirement investment. For the investments, commercial properties often prove to be more beneficial than residential ones, but ever considered the cons of investing in the real estate industry?
Yes, every coin has two sides and so is the case with investing in real estate. If you know about the benefits of investing in a property, then it’s just to know about the cons of the same as well.
Let’s talk about the pros and cons of investing in real estate.
Real estate prices are generally trended upwards, offering great revenue and benefits to the investors. According to the experts, waiting for five years can help gain nearly 40%to 50% benefit. Until you sell, you always have the option to rent it out and earn a stable income as the rent.
2. Less Volatile than Stock Market
Of course, you can always buy stocks of the leading companies and earn great revenue, but the market also poses various chances of loss, unless you are an expert. However, the prices in the real estate market fluctuate and move slower in comparison to the stock market. In nearly 90% of cases, the prices are likely to move upward which can be attractive to many investors.
3. A Tangible Asset
A Real estate is a tangible form of investing and this is the reason that people find it the best option when looking for an investment opportunity. By investing in real estate you can physically see and feel your investment. You can rest assured that your investment asset is not going anywhere (unless it’s a mobile home of course). On the other hands, if investing in the stock market you can see the hard copies of your investment only if you make a request.
4. Easy to Understand
Investing in the real estate industry is as easy as buying a car. You just need to select the best property at the suitable location and with the features that suit your needs. The real estate industry is much easier to understand compared to stocks where you need to keep an eye on the latest trends and have information about the ups and downs in the stock market.
5. Utilize the Benefits of Leverage
It is the easier to invest into the real estate as you need to not to have the total amount of the property value. In most cases, investors can put a 20% down payment to own the property with the rest financed by a mortgage. This allows investors to achieve much higher investment returns.
If you have ever tried your hands into the real estate investment, you would already know what makes it the most complex and tiresome investment option. You need to visit multiple properties to have a look at them and deal with multiple calls throughout the day to make the best offer. However, once you’re able to get the right option, it can bring great returns.
2. Real Estate is Expensive
Compared to other asset cases like a stock market, mutual funds or bonds, real estate is one of the most expensive assets you can invest in. Of course, you may have enough earning to own a home, but buying an additional property may seem like a burden. But the returns are also relatively better than you can gain with other forms of investment.
3. It Can Cost You Monthly, if Unoccupied!
No matter if you use the property or not, but you may need to pay the monthly bills, property taxes, maintenance, utilities, insurance, and more. If unoccupied for a long time, it can lead to great additional financial losses that you need to bear every month. So, finding a tenant is the right choice you can make to enjoy the benefits.
4. Non-Liquidity
Among the all other investment options, the real estate is the least liquid. It may take weeks, months, or even years before you find a suitable buyer for your investment property. Selling it urgently can lead the considerably lower price that may reduce the benefits to a great extent.
5. Hands-on Management
You simply can’t leave your investment property as it requires someone to take care of it. For example, if it is a rented property, then the repair, maintenance, and other work need to be handled by a responsible person like a property management professional. If you can’t afford to hire a property management company, you might need to be the one to do all this.
So you know that the real estate investment has its own pros and cons, just like any other form of investment, yet it stands among the most preferred options when people start looking for investment opportunities.
Source: https://www.investmentrealestate.biz/blog/5-pros-and-cons-of-investing-in-real-estate-industry/
Yes, every coin has two sides and so is the case with investing in real estate. If you know about the benefits of investing in a property, then it’s just to know about the cons of the same as well.
Let’s talk about the pros and cons of investing in real estate.
5 Pros of Investing in Real Estate
1. Assured & Stable ReturnsReal estate prices are generally trended upwards, offering great revenue and benefits to the investors. According to the experts, waiting for five years can help gain nearly 40%to 50% benefit. Until you sell, you always have the option to rent it out and earn a stable income as the rent.
2. Less Volatile than Stock Market
Of course, you can always buy stocks of the leading companies and earn great revenue, but the market also poses various chances of loss, unless you are an expert. However, the prices in the real estate market fluctuate and move slower in comparison to the stock market. In nearly 90% of cases, the prices are likely to move upward which can be attractive to many investors.
3. A Tangible Asset
A Real estate is a tangible form of investing and this is the reason that people find it the best option when looking for an investment opportunity. By investing in real estate you can physically see and feel your investment. You can rest assured that your investment asset is not going anywhere (unless it’s a mobile home of course). On the other hands, if investing in the stock market you can see the hard copies of your investment only if you make a request.
4. Easy to Understand
Investing in the real estate industry is as easy as buying a car. You just need to select the best property at the suitable location and with the features that suit your needs. The real estate industry is much easier to understand compared to stocks where you need to keep an eye on the latest trends and have information about the ups and downs in the stock market.
5. Utilize the Benefits of Leverage
It is the easier to invest into the real estate as you need to not to have the total amount of the property value. In most cases, investors can put a 20% down payment to own the property with the rest financed by a mortgage. This allows investors to achieve much higher investment returns.
5 Cons of Investing in Real Estate
1. Lot of EffortsIf you have ever tried your hands into the real estate investment, you would already know what makes it the most complex and tiresome investment option. You need to visit multiple properties to have a look at them and deal with multiple calls throughout the day to make the best offer. However, once you’re able to get the right option, it can bring great returns.
2. Real Estate is Expensive
Compared to other asset cases like a stock market, mutual funds or bonds, real estate is one of the most expensive assets you can invest in. Of course, you may have enough earning to own a home, but buying an additional property may seem like a burden. But the returns are also relatively better than you can gain with other forms of investment.
3. It Can Cost You Monthly, if Unoccupied!
No matter if you use the property or not, but you may need to pay the monthly bills, property taxes, maintenance, utilities, insurance, and more. If unoccupied for a long time, it can lead to great additional financial losses that you need to bear every month. So, finding a tenant is the right choice you can make to enjoy the benefits.
4. Non-Liquidity
Among the all other investment options, the real estate is the least liquid. It may take weeks, months, or even years before you find a suitable buyer for your investment property. Selling it urgently can lead the considerably lower price that may reduce the benefits to a great extent.
5. Hands-on Management
You simply can’t leave your investment property as it requires someone to take care of it. For example, if it is a rented property, then the repair, maintenance, and other work need to be handled by a responsible person like a property management professional. If you can’t afford to hire a property management company, you might need to be the one to do all this.
So you know that the real estate investment has its own pros and cons, just like any other form of investment, yet it stands among the most preferred options when people start looking for investment opportunities.
Source: https://www.investmentrealestate.biz/blog/5-pros-and-cons-of-investing-in-real-estate-industry/
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