Real estate is definitely one of your best bets among investment options.
Nowadays real estate market presents a lot of housing choices, both for personal use and investments. That’s why it is essential to be aware of the existing pitfalls and the policy of the investing in general. Real estate investment involves the investment of personal money resources in property – ready for settlement or under construction – with the purpose of making a profit.
There are several types of profits:
- Passive income with capital investments – the acquired property is leased.
- Speculative income – the acquired property is resold at a more favorable pricing.
The type of investment is closely connected with the type of property sold:
- property under construction
Commercial property is most common in tourism industry – popular coastal cities and recreational areas in particular. To clarify, some pros and cons of such investment should be taken into account.
- Such investment is a reliable way of fundraising since the possibility of inflation in this area is very low.
- Any kind of residential property is very ‘solid’ as opposed to the abstract interest rates and deposits. Whatever the fate, investors are guaranteed to be left with a roof over their heads, and one that could be used at any time.
- Provided the business is successful, the renting of premises could be life-long, which in turn requires a long-term investment.
- The acquired item can be sold at a more competitive price or given as a gift. You can also obtain a mortgage loan.
Summarizing, real estate investment is a secure and consistent way of fundraising with the minimal level of risk.
One should also be aware of the disadvantages of investments to be able to identify and deal with them if necessary.
- The cost of renting is constantly shifting – that’s why the overall income might be lower than that of capital investments.
- The selling of the object might take more time than was initially expected.
- Apart from main expenses (utilities, security system, repairs and maintenance, taxes) one should consider additional expenses, such as agency services, notary services as well as state duties. There are occasions when the amount of money spent can exceed 5 percent of the property price, which makes a considerable sum.
- The affordability of such business is rather low. The more ‘approachable’ variant would be investing in undergoing projects, but in this case there is a risk of delay which is likely to result in a considerable loss of time and money.
To be successful in this area, one would need to put a lot of efforts into gaining substantial knowledge on the legal framework in order to avoid schemes and frauds or being backed up by a proven company with wide experience in this field.