Infotipsnews.com – Is Real Estate as an Investment Good? How to Do It in the Right Way?. For years, people have been using real estate as an investment. Because everyone needs real estate for many different reasons. From residence, commercial, until industry needs real estate. For that reason, investing in real estate will be a good start.
Pros and Cons Invest in Real Estate
Even though real estate as an investment has great values, some avoid investing in real estate. Aside from its long period revenue, it is also a high risk investment. For that reason, here we gather some pros and cost for investing in real estate:
1. Why Real Estate is a Good Investment
Let’s start with reasons why many people are interested in putting their money in real estate investment. Therefore, look at the reasons below:
- Everyone needs a place to stay (residence) and a place to do business (commercial and industrial).
- You can purchase it below the market price then flip it to make a huge profit.
- Steady income for renting the real estate and as the time goes by, the amount will increase.
- Real estate prices usually climb up, moreover, if it is located in a development area.
- There’s no tax for real estate but when you sell it.
- A good tool to defer inflation and when the inflation is high, it can also bid up the price.
2. Why Real Estate is a Bad Investment
There are more than what we mentioned above on the good side of real estate investment. But at the same time, investing in real estate might be a way to flush your money away. Thus, look why real estate investment is not for everyone:
- Real estate investment is not liquid and will need time to sell if you need money.
- You have to add a maintenance fee in your investment plan.
- Income from real estate can be varied, depending on the payment plan for the property.
- There’s rent control regulation, so you can’t jack up your real estate rent.
- Although there’s no rent tax, selling real estate has a huge tax cut from your profit.
- Real estate value might decrease due to unexpected factors.
How to Gain Profit from Real Estate as an Investment
Looking at the pros and cons, utilizing real estate as an investment still can be an option. Because as long as you are cautious, you can still gain profit from this investment method. Thus, to do that, here are what you can do:
1. Rent Properties
The old way to invest in real estate is to rent your property. If you have a number of properties and just sitting dust, then you have to make money from it. To do that, you don’t have to sell it – except you need a large amount of money.
By renting your properties, you will have a steady income in months or years. But you should have the ability to manage your tenant and properties that you rent. Also, do not forget to keep maintaining your properties, so your tenant would not run and look for the better.
For renting your properties, make sure to look up the market place around the area. Then, make sure not to set the renting price too high or jack up the price without warning. If you wish to raise the rental price, then do not forget to update your property’s facilities. That way your tenant would not feel robbed and willing to renew their contract.
2. Join Real Estate Investment Groups
If you do not have the patience for managing and maintaining properties, then just join a group. There is an answer for this problem by joining REIGs or Real Estate Investment Groups. But with this type of real estate investment, you have a certain cushion of money.
All you have to do is to put your money in a company that runs a group of investors in real estate. The company then runs business by building or buying properties from the investors’ funding.
By the book, you are entitled for a unit or more properties. But the hassle for maintenance and managing the tenants are under the company’s mercy. Thus, all you have to do is just sit there and wait for the income to come.
3. Open Real Estate Investment Trusts
Different from the REIGs, REITs or Real Estate Investment Trusts managed by a large corporation. Here, the corporation or trust will use your investment to operate, purchase, and sell income-producing properties.
For short, you can say that REITs are like stocks or exchange-traded funds. Thus, this type of investment is appropriate if you wish for regular income.
Usually, REITs invest in large properties, such as malls, mortgages, healthcare facilities, and office buildings. Further, despite the old way of real estate investment, REITs are highly liquid. So, you can get your money back if you need it in a short while.
4. Utilize Real Estate Online Platform
Another new era in real estate as an investment is by joining the online platform for real estate or real estate crowdfunding. Therefore, your name will be entitled in the property that you are investing, even if physically you have never been there.
Also, with its crowdfunding system, you do not need to pay a large amount of money to have your name on the deed. Also, because of the online platform system, you can meet different investors from around the globe and fund on properties building.
But, if you are investing through an online platform, usually there is a certain period. Therefore, you can get back your money before the period ends, even if you need it badly.
5. Flip House
The last way in gaining profit through real estate is by flipping houses. Here, from the start you intend to sell your property at the end. Also, there are two ways in flipping house to gain profit, they are:
- You can start small by buying a property, renovate and upgrade the facilities, and sell it for a higher price. Make sure to follow up the trend for properties in the area. Because you should not upgrade the property for more than the area’s value market.
- The second way is by buying a property in a hip area, holding it for a while, before selling it with a certain margin. By the hip area, we mean that you have to be sure that the area’s market price is always on the rise. That way, you will gain profit from the transaction.
There are many ways in gaining profit from real estate as an investment. Therefore, even though this investment is a high risk, many people are still willing to take a chance.
