Your money should always be working for you. While saving is a great first step, prudent investment is crucial when it comes to growing your wealth. More and more people are beginning to recognise that stocks and bonds aren’t the only—or even necessarily the best—way to invest. For those with the right knowledge and expertise, an investment in property can be very profitable. Here’s why.
The real estate market, in comparison with the stock market or investment in mutual funds, is relatively stable. After all, everyone needs somewhere to live—it’s one of the basic human necessities. Bears and bulls aside, there will always be a market to invest in property.
Furthermore, real estate is tangible. Unlike stocks, which can fall overnight, resulting in millions of dollars in losses, real estate is much more stable. While the market itself fluctuates, time nearly always corrects this.
For investors that opt to let property, there’s an opportunity to improve cash flow before the property is even resold. Additionally, well-chosen real estate nearly always appreciates in value so long as it is minimally maintained. Savvy investors will do much more than minimal maintenance, however.
Relatively minor cosmetic alterations and functional changes can result in a truly impressive return on investment. A redesigned kitchen or bath can turn a tired old home into a newlywed’s dream come true.
Property investment might not offer the potential returns that stocks do, but they offer a steady security that stocks simply can’t match. Even the most conservative mutual funds don’t typically offer the predictability or certainty of a real estate investment, provided that the investor has a robust understanding of the market. Rent prices don’t go down. Property values can dip, but unless they were artificially inflated, they recover. There is always a growing demand for property, because, on this island of ours, it’s a finite resource.
While property is an exceptional way to invest in a solid, predictable market, it’s still a market which requires the investor to have a great deal of knowledge. Having an agent or a trustworthy property investment consultancy that understands the local market inside and out is key. Furthermore, while the tangibility makes it a more secure way to invest in property, it’s also an obstacle should the investor want to recoup their money quickly. While this isn’t always the case, real estate should typically be viewed as a long term investment, not a short term one.
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