Andrew Carnegie once said, "Ninety percent of all millionaires become one because of real estate ownership."
However, like any investment, real estate involves risk and a considerable amount of time, effort and money. In addition, it takes time to learn how to find investment properties, repair and transform them, manage tenants and perform other ancillary tasks. Despite what the advertisements claim late at night, real estate investments are not for everyone. Should you consider jumping into the market? Here are some pros and cons of real estate investing that you should consider before your next move.
Benefits of investing in real estate
There are many reasons to invest in real estate. For starters, as opposed to futures contracts, these are goods you probably already know and understand, at least to some extent. Not to mention, historically, real estate is rising in value. Here are the main reasons to consider investing in real estate.
Real estate is a real, tangible thing that will always have monetary value. This is not always true of other investments. For example, if you invest $ 200 in the stock market and the market crashes, your stock may be worthless, just a piece of paper, the next day.
On the other hand, regardless of what the housing market does, you still own the land and all the buildings on it. And this land has value. Your $ 200,000 investment may drop from $ 200,000 to $ 100,000 if the housing market collapses, but it will always be worth something.
Real estate value
Historically, real estate increases (grows) in value over time. In other words, even if you invest $ 200,000 and a crash halves that value, your property will eventually recover. You can see this from the bursting of the housing market bubble in 2007, subsequent recovery in 2013 and prices skyrocketing now.
Many factors contribute to the appreciation of your investment, including location, supply and demand, economy and renovations, to name a few. However, based on what the market has done in the past, U.S. real estate values have risen by 3.5 to 3.8 percent per year. For 10 years, that translates to about $ 35,000 for every $ 100,000 of the value of your property.
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