If you are thinking about investing in real estate, then you’re not alone. Real estate gets a lot of attention from investors if they want to get into a market where the assets are considered stable. Of course, there are safer and riskier ways to invest in real estate, but in general, it is a good place to put your money long-term. Here are the five most compelling reasons that you should genuinely consider real estate if you have a chunk of money to invest.
A Future Income Stream
If you purchase a house that is in livable condition, then you can at least consider keeping it as a rental property. You could hire a management company to handle the maintenance for it, and they can find qualified tenants as well. If you like, you could also avoid having to pay the management company by finding tenants for the house yourself and acting as your superintendent. Of course, in that scenario, it’s you that the tenant is going to be calling in the middle of the night if there’s a plumbing disaster. It depends how hands-on you want to be.
Tangible Asset Value
The idea behind tangible asset value is that real estate is an asset that’s brick-and-mortar, unlike stocks, for instance. In the case of real estate, you can be less worried about the principal-agent conflict. This refers to the extent to which the investor’s interest is dependent on the competence of managers. In other words, there is less likely to be some catastrophe in which all of your money is lost, unlike giving your money to a hedge fund manager. There is far less volatility.
If you have real estate as part of a diversified portfolio along with some higher risk assets, then it stabilizes it somewhat. It is therefore more likely that you’ll get a higher per-unit rate of return over months or years.
Neighbourhoods on the Rise
Real estate moguls that know a particular area very well will also likely know when a neighbourhood is likely to “turn over,” which is to say when all the properties will skyrocket in value. If you can locate someone who knows about undervalued or distressed properties in a marginal neighbourhood, by going in with them, it is highly likely that you can turn a profit if you’re patient.
It’s Easy to Get Financing
Even if you don’t have a ton of money to invest in real estate on your own, it can still be worth it to do it. That’s because home loans are an enormous part of any bank’s business model. They will lend a substantial portion of a home’s value to a qualified applicant because they know that a residential property is an asset class that is not likely to have significant fluctuation. That makes it easy for an ambitious investor to get started.
If you need legal help with real estate issues, then you should not hesitate to reach out to a qualified law firm today. Real estate is one of the safer forms of investing, provided that you have sound advice from individuals and entities that won’t steer you wrong. A plan to get into real estate may not be far-fetched for you at all.