Investing in Real Estate


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The real estate sector has been a magnet to quite a number of investors due to its myriads of benefits. This is one of the few areas that has experienced tremendous growth in spite of inflation and economic meltdowns.

Investors have paid close attention to real estate and opted to take the risk of investing in it. Some of the advantages and benefits are outlined below:

Benefits of Investing in Real Estate

1) Leverage

It means using any influence in order to gain an advantage. In this context, it is the use of various financial instruments or borrowed capital to increase the potential return of an investment.

In real estate you can do this by taking a mortgage to buy property and only put a fraction of the total cost and still remain entitled to all the benefits.

It works best when rents and property values are rising because when rents and value of property rise, their monthly mortgage for property remains constant, hence creating bigger profit margins.

2) Control Over The Property.

Real estate gives you control over the property or in other words, you can be your own boss and decision maker. Property is a tangible asset and as a result its investments are under your control. You can control many things relating to the physical property.

This could be in terms of deciding which property to invest in, the kind of tenants to work with, who will manage the property etc. Provided that there is good management you can improve the value of your investment.

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3) Real Estate Can Be A Part Time Job

When you are an investor in the real estate sector, you don’t necessarily have to quit your job. Real estate gives you room for flexibility; for instance you could have time for your primary job, social activities and at the same time be a real estate agent.

Besides the primary job, this can also be used as a channel to supplement your income and also test the waters before you can may be choose to venture into it on a full time basis. In that regard, experts advise that one can start with rentals if possible.

4) Potential for Appreciation.

Over the years, it has been observed that the longer you hold on to your property the probability of you making more money is quite substantial.

In connection to that, real estate acts as a cushion against inflation owing to the fact that the value of houses and rents go up when inflation rises.

No wonder experts will tell you that in real estate, you don’t wait to buy, rather you buy and wait. In that regard, real estate should be more of a long term investment rather than short term.

5) Cash-flow.

Finally, this is a reason why real estate is a magnet. The steady flow of income more so that which is earned from rentals attracts investors to real estate.

This income covers expenses and makes you extra money. This is more pronounced in areas which have proximity to institutions of higher learning.

The steady flow of income could also go a long way to act as long term financial security which is also facilitated by the fact that properties appreciate in value overtime.

From the above argument, it is crystal clear why real estate is an area worth investing and risk taking. I have focused on the advantages only.

Later on, I will tell you about the risks that one should be ready to take if he/she has a dream of investing in real estate.

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