Guest blog: Investing in real estateSubmitted by Agrawal Associates on May 18th, 2018
May 21, 2018
Real estate is often one of the easier ways to get involved with investing. Researching stocks and bonds can be complicated: you have to know which are strong, which are good earners, and there’s a significant benefit to having a clear understanding of the stock market before you dive in. It can be a volatile experience to part with your money without the confidence of how it will work out.
Here are just a few things to consider about real estate investing.
1. Markets fluctuate, but over time, homes go up in value.
If you can adhere to the old adage of “buy low and sell high,” you’re well on your way. This, of course, means buying a home that may need some work or purchasing a property in an up-and-coming neighbourhood. Buy it when the market is soft and you’re in business. Once that neighbourhood is the new “hot spot” to be, people will be clamouring to live there. If you choose to sell at that time you’ll be sure to make a tidy profit.
2. Ability to remain in control.
If you like control then the stock market may not be the place for you, but real estate is. If you own a home you are free to do with it what you choose. The options are endless. Live in it yourself, rent it out, spend time renovating it or change the exterior. The bottom line is: if it’s yours, it’s yours. End of story. You make the decisions, you take the chances, and you ultimately win the battle because no one can tell you when to sell or who to sell to. Where else in investing do you get 100 per cent control over everything?
3. A flexible investment.
Investing in real estate provides flexibility that many other investments don’t have. A house purchase could be for long-term capital growth — sit on the property until the market dictates it’s the right time to sell. Or perhaps you need positive cash flow. Buy a property, rent it out and use the proceeds to cover the mortgage and carrying costs. The property can also add value to your financial portfolio.
4. Appreciation on real estate.
Your original loan is paid down each month but the value of the asset (the house) goes up over time. Yes, the markets do go up and down. There are also recessions and depressions to think about. However, if you think about your childhood home and how much it cost your parents to purchase it versus the value of the property today, you’ll see a whole lot of appreciation on the same property. Markets cycle, but over time, holding property is a great, solid investment.
There is a certain risk to any investment — real estate or otherwise. There is no crystal ball to show what the future holds. As with any investment opportunity, start with some basic research. Learn how the markets operate and where some of the best deals are coming from. Which parts of the city are “hot” and where are the up-and-coming neighbourhoods?
You may not always make the right decision, but you can learn and grow from your first purchase. Before you know it, you will be on your way to making your mark and watching your money grow.