Perhaps you have heard about some people who earn extravagantly from real estate, and your interest is piqued on investing in property assets too. Just like any business venture that you decide to undertake, you first need to assess whether your decision on real estate investment is good or not. This is very important in determining whether your efforts, time and money will at least not go to waste.

It would help in coming up with a good decision to first know what pros and cons such investment can offer.

Is real estate a good investment for you? Find out if it is by knowing the advantages and disadvantages this venture can offer.

Advantages of Real Estate Investment

Is Real Estate A Good Investment: High-Profit Potential

You may be purchasing a property at a price higher than the usual prices of commodities. However, in property trading, you can sell a property at a higher price, so your profits will also be higher.

Is Real Estate A Good Investment: Investing In Leverage.

This investment lets you borrow money according to the property’s value. Compared with other products that you can invest on, you will realize that it is fairly easier to obtain funding for it. In real estate, you will only need to pay a fraction (5-20% of the price as down payment), for example. So, even if the property is costly, you can still find it easier to acquire compared to a big machinery with the same price.

Is Real Estate A Good Investment: Local Advantage.

The topic about local advantages of land assets is hardly discussed in the market. Thus, if you know your locality, city neighborhood or town very well, you have a lot more knowledge on properties there that any other experts around the world.

Is Real Estate A Good Investment: Bird Dogging Beginning.

One great way to start on real estate investment is by first becoming a bird dog. A bird dog is one who searches and finds great deals on properties for other experienced and expert investors. This way, you can already acquire the knowledge necessary for eyeing if a piece of property is profitable or not. You can spend your time mastering the ins and outs of real estate investment while getting paid for doing so.

Disadvantages Of Real Estate Investment

Is Real Estate A Good Investment: Non-liquid Investment.

This type of venture is one where money does not constantly flow. Your money could stay dormant if you are not able to sell or rent out the property. Furthermore, there are also tax and maintenance expenses to be paid. To sustain your investment, you need to have another investment or liquid asset where money can constantly be earned. So even while money sleeps in the property, you still have a reliable source of living.

Is Real Estate A Good Investment: Possible Miscalculations.

Many investors commit the mistake of purchasing properties during a boom; but without including in the computations, other costs involved such as repair and maintenance. Thus, they may be able to buy a great investment, but eventually, result in a loss because of failure to finance other necessities to make the property more sellable.

With any investment, it is important to consider the potential risk that everything goes to hell in a hand basket. Obviously, this can be a big problem with stocks. A high flying stock today can be a loser in a big way tomorrow. Just ask the folks that owned Enron, Adelphia and so on. The real estate market, on the other hand, tends to be less volatile. Valuations will change from time to time, but drastic moves are rare.

The decision to invest in real estate is one that only you can make. As with most assumptions, real estate may or may not be a good investment strategy.

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