If you’ve thought about how to earn passive income and possibly save for retirement, maybe you should consider investing into real estate. Real estate is the most rewarding form of investment – because your initial investment gets payed off by other people’s money, while you gradually increase your monthly cash flow. Perhaps you didn’t know, but real estate is also one of the oldest forms of investing, dating back to even the earliest days of human civilization – today being one of the top five basic asset classes that every investor should add to their portfolio.
Real estates are a profitable, long-term hold, because people will always need a place to live; it is always in demand. As a multinational and international portal, experts who created Propbooster can confirm that real estate, whether it be rental or not, is a solid and secure investment anyone can make. So, do you have what it takes to make your first investment? We are going to share with you everything you need to know about it before you do.
It’s Worth Your Time
Cash flow in real estate investing comes almost immediately – and it doesn’t matter what type of real estate you invested in, or through what means you got it. You could’ve done it with your cash only, or had someone help finance it, but all in all, the first rent check comes in a month time – and it instantly starts to pay off, and before you even know it, you’re making profit.
The other reason is to have passive income for the rest of your life – how good can this get? If you’ve managed to invest into real estate and started making profit, the hardest part is over. You don’t have to start out intending to make a fortune, too – you might as well buy a house you can live in, and once you realise you can generate profit as your home value increases, let the investors take the leap and start investing proactively.
If you’re an investor, real estate can reduce your overall risk of the portfolio – simply allocate funds to various types of assets and securities. For example, if you want to maintain a stable practice, the majority of your investments should be allocated to real estate, and then after that, stocks, mutual funds, RRSPs and other kinds of investments. This asset class diversification will allow you to make sure that a part of your portfolio is always performing well, which will in turn also increase value of your complete portfolio. Not to mention the risk level – high-risks assets need to be levelled with stable assets, such as real estates.
Becoming a real estate investor isn’t all that difficult. Most people get scared if they hear the word “investor”, as if you have to have hundreds of thousands of dollars in your pocket to make your first investment. In reality, it’s much simpler – there are infinite financing options available. If you want to become a successful real estate investor, you might have to figure out how to take advantage of them. Here’s an example: put down 20% on a property that you want, and finance the rest with a low-interest mortgage. If the mortgage option is not available to you, don’t panic. There are other options, like cash, personal loans or non-recourse loans. Make sure you have everything thought out before you take the leap of investment, and you’re good to go.
Investing in real estate is inflation-proof, which is really significant if you’re starting out fresh. Rental properties usually increase with inflation, all the while mortgage payments on the same property remain relatively the same. That means that you can increase your cash flow although you won’t increase the expense of holding the property.
Very few investments are made easy using bank’s money, too, so the ability to make down a payment and leverage your capital is one of the most rewarding things in real estate.
People who invest into the stock market are required to be far more educated on the subject if they want to succeed – research is a fundamental part of their business, and they need to understand how the system works at all times. Property investing, however, is much simpler – you simply need to have a computer and browse some properties online. Conducting research about real estates is either free or really cheap on the internet, or you can visit some neighbourhoods, open houses or auctions without having to do a ton of work beforehand.
Only You are in Control
Investing in a sharemarket can be tricky; you will have to hire a broker to handle your trades, and the value of any shareholding relies on the market conditions. Of course, the moves the owners of the company make also impact this; which ultimately presents an uncertainty in leading such a business. It’s a different story with property investments – the moment you set a deal, you directly own the asset and have complete control over it. That also means you can add value to it, for example, you can buy a house and renovate it, adding it far more value, or if you rent an apartment, you can increase cash flow by simply upping the rent.
What makes real estate a good investment is that it’s easy to understand, it’s stable, reduces risks of losing money with allocated funds, diversifies a portfolio, brings a long-term capital, and most of all, it’s safe to try for everyone. If you’ve considered starting your own investment, make sure to do your research on the market. Like any other investing, it also requires some years of practice, but the important thing is it’s fairly easy to start.