Are you still weighing in on the benefits and drawbacks of real estate investment? Property investment is becoming the most appealing source of wealth, and this is understandable. Experts would advise you to thoroughly investigate the aspects of property investment; with the right amount of knowledge, you’ll be able to confidently make the right decisions.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” –Franklin D. Roosevelt
What is property investment?
The process by which an entity purchases a real estate property is referred to as property investment. The purchase is a means to an end for a buyer looking to earn a return on investment through rental income or by reselling the property and achieving a certain capital gain.
What are the pros and cons of real estate investment?
While it is widely accepted that property investment is one of the safest types of investments, it is still critical to be aware of any potential disadvantages. Here are some of the benefits and drawbacks of real estate investing.
The Benefits
Volatility: If you’ve ever tried day trading in the stock market, you’ll understand the frustration of dealing with fluctuating stocks that are extremely volatile. Property investment, on the other hand, offers less volatility and more stability.
Capital Gains: Your benefit from investing will be dependent on the rise in the value of your given property. If the value of the property increases, you’ll be rewarded immensely with a capital gain upon selling.
Income: Renting out properties can also provide a stream of revenue for you.
Tax Benefits: Real estate offers one of the best avenues for tax advantages as an investment. Through depreciation, deduction of expenses, utilizing a 1031 exchange, and more, real estate investors are given large benefits with taxation.
Ability to Leverage Debt: Banks want to give qualified peoples’ money for investments. With interest rates as low as they are, not only does it make investments cost less for borrowers, but it also increases the profit margin for the investments.
The Cons
Costs: Owning a property entails subsequent costs that you wouldn’t necessarily have to deal with in other forms of investments. Expenses include insurance costs, HOA fees, mortgage repayments, maintenance, renovations, and so on. These additional expenses may occur on a regular basis, or they may appear unexpectedly. However, you can adopt an approach that prioritizes strategizing, planning, and choosing the right investment, so that the income you’re generating through rent covers all of the expenses and still provides you with some cash flow.
Loss of value: If the property value falls, you may end up owing more than it is worth. However, this is usually temporary.
Liquidity issues: Property takes longer to sell than shares. Depending on where you live, selling your home could take weeks or even months. If you need to access your money quickly for other purposes, the lack of liquidity can be a disadvantage.
Added Value of Working with a Real Estate Broker: Val’s Property Management
If you’ve read this far, you’re probably still interested in learning how to approach property investing in the most profitable way possible. As a means to avoid any potential hurdles, you can opt for choosing to invest through a property management company. Conveniently, VPM & Pyramid Realty is a one-stop-shop for both homeowners and investors that provides services for both investors and homeowners. As an investor, Val’s Property Management facilitates both the buying and selling of the investments, placing tenants, handling tenant issues, evictions, repairs, maintenance, and rehabs. Val’s Property Management is a fantastic way to invest in real estate with security and ease!
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