If you’ve come into a little bit of money recently or have been saving hard, then you might be considering how best to invest it. With so many different investment options, it’s difficult to know where is best to put your money. Stocks, shares, a high-interest savings account, bonds, gold, the options seem limitless. One of the most interesting (and potentially profitable) opportunities for investment is real estate. Is this the route you should go down? Let’s investigate the pros and cons of investing in property.
Let’s kick off with the positives of investing in real estate – there are plenty of them! Firstly, one of the main advantages of this investment route is that you can make a lot of money in a relatively short amount of time. Especially if you buy somewhere that needs a bit of work on it, so you can do it up and sell it on. Stocks and bonds only yield around 2%, whereas real estate can generate a significant profit through both selling on or renting. Property also tends to keep up the pace with inflation, which means that mortgages can reduce and profits can rise. Another key benefit of investing in real estate is that you have a real bricks and mortar asset. If anything were ever to happen to your other investments, you’d always have a property to fall back on. This gives you somewhere to live if you need, along with the possibility of selling on to recuperate your investment. As long as the housing market hasn’t plummeted since you first purchased the property, you’ll be able to at least get your investment back. Finally, you can work your way up the property ladder and scale your investment by buying, increasing the value through renovation works, and then selling. Before you know it, you could have an entire portfolio of properties to make money from!
As with any investment opportunity, there are always going to be some drawbacks. The first one is securing that first property, which could be difficult if you don’t have a large enough deposit or if you have a poor credit rating and cannot get a mortgage. If this is the case, investing in real estate is something you may have to consider later down the line; once you have improved your credit score and secured a big enough deposit. Another drawback is that the housing market can be a volatile one. With house prices sitting quite high at the moment if the bubble bursts then there’s a chance you could lose a lot of money on your investment. It’s best to talk to other experts in the property market, to find out good prices for buying and selling. If you don’t have any experience in real estate, then you might find one of the biggest stumbling blocks is actually knowing what you’re doing! Do you have any connections in the building industry? Do you know how to renovate a house? What about the plumbing, electrics or decorating? What do you do if you find structural damage or damp? These are all aspects you’re going to want to research before you put your offer down on your first property.
In conclusion, there are definitely a lot of arguments for and against investing in real estate. As long as you do your research and have the funds behind you, then it’s definitely a good idea to find a fixer upper to start your climb up the property ladder. However, remember that like with any investment, things can change. Always have a contingency plan, just in case.