Real estate investing
There are many reasons to invest in real estate, earn an income from real estate, renting out a house, apartment or a spare room. Maybe you have a shed or vacant block that you could lease out. Commercial property, wholesaling or flipping houses could be another income source. Whatever avenue you decide can produce a source of income that is passive or as active as you wish.
Real estate investing is relatively easy to get into, not requiring any specialist knowledge and getting finance is usually a simple matter.
10 Good Reasons to Invest in Real Estate
It is Real
Real estate is real, bricks and mortar or actual land, it is a finite resource. As the population continues to rise, there are no more land being made. Therefore real estate is fairly safe compared to other forms of investment and has continued to rise in value over the years.
Easier to understand
Researching real estate is easier than the share market with it many complex systems. With real estate you check out whats on the market and decide what type of property you wish to invest. This is a simple version of real estate investing, there are many factors to consider when investing in real estate.
Finance is more available
Leverage can be used to great advantage. The rate of leverage used in real estate can be as much as 95%-100% depending on the deal you negotiate. If you can negotiate a 10%-20% below market value, you should be able to get 100% finance. I have done this with my last 2 real estate investments. Plus this holds you in good stead if the market doesn’t move much as you have already achieve your profit when you bought at below the market price.
Flexibility is another good reason to invest in real estate. You can invest for long term, short term, passive income, positive cash flow or capital gains. Depending on your goals, real estate can give you added income if positively geared (rent is greater than holding costs). Passive or active, you have total control over your real estate investment.
Multiple streams of income
Different forms of real estate investing, provide many streams of income. Sub dividing, renovating, developing can provide substantial returns. Your block maybe big enough to split into 2 blocks or more, enabling you to double your return. Renovating can also return good profits if you keep a close eye on costs and keep to your budget. Developing real estate will probably return the best return, however it is also the most risk.
Pricing is always negotiable in real estate investing, you may have to investigate many sites before you come across a deal that suits you. Never take the asking price as gospel, if you are able to find out the buyers situation and their motivation for selling, you can negotiate a deal that is a win win for you and the buyer.
Holding real estate as an investment may provide tax breaks, which can be used across your income streams. Tax breaks may include depreciation of the building and fittings, negative gearing which costs you money initially, all costs you incur to produce income from your real estate investment.
Good base investment
Real estate is a strong asset, which can be used as a backing for other investments. Once you have equity in your properties, it can be used to make more investments. These other investments maybe more real estate, shares, gold or anything that you wish to invest in.
Home buyers are the majority buyers in real estate, roughly only 30% of real estate buyers are investors. This makes real estate a fairly easy investment to convert to cash if required. Home owners often buy their real estate because they like the property and are happy to pay whatever the buyer sells for, investors on the other hand always make their buying decision based on figures.
OPM- Other peoples money
The best part of real estate investing is other people helping you buy your investment. Through renting you gain a cash flow and also pay off your investment debt if it is positively geared.