Real estate refers to land, houses, apartments, and commercial buildings. Also known as brick and mortar investment, real estate attracts many investors because of its almost guaranteed return on investment. The value of land and property usually appreciate over time unlike that over other investment plans that tend to be affected by prevailing economic conditions.
Besides purchasing the property from developers and renting it out to build your equity, you can also make money in the real estate industry by flipping houses. That is, understanding the market dynamics and using that knowledge to buy undervalued property in the market, doing some upgrades and selling to cash buyers at the market price. Besides profitability, there are other reasons to invest in the real estate market.
Real Estate Is Easy To Understand And Get Into
You don’t have to be a seasoned investor to understand the market forces that come to play in the real estate industry. It is as simple as verifying the authenticity of the developers you are transacting with and getting the correct valuation of the property, and you are good to go.
Unlike stock trading, there isn’t a lot of dynamics to continuously monitor. To understand the property market, you simply attend site visits and conduct house inspections, consult with your financial advisor and go online for additional information.
Comparatively Low Volatility
Real estate is a relatively safer investment option with low risk of making losses on your initial investment. The property market is not as volatile as the stock market, and chances of prices fluctuating by as much as up to 30% as they do often do on the stock market are quite minimal. Furthermore, few events impact the property prices, unlike the stock market where a news story can cause the stocks to crash.
In fact, in the real estate industry, the longer you hold on to a property, the more you make out of it.
Ease of Acquiring Financing
Most financial institutions like banks and asset financiers have options for their customers who want to purchase the property. This is usually in the form of a mortgage, where the property itself acts as the security for the loan. You, therefore, don’t need to have guarantors to get a mortgage. You can check Roundpoint Mortgage Reviews to see what to expect when signing up for a mortgage.
Most lenders prefer to lend money for real estate investment since the risks of default are lower compared to car loan financing and other asset classes. Should one default on the mortgage repayment, one option to turn to if you are struggling is using the house as collateral.
You Can Leverage Your Property
Better still, you can use your property as leverage and security to borrow money in the future. A depreciating asset like a car does afford liberty when it comes to borrowing after purchasing it. With property, however, some lenders can allow you to borrow up to 80% of the property’s value with some even willing to go up to 95% depending on your credit score.