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Thread: Why buy property?

  1. #1
    Join Date
    Jun 2009
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    Default Why buy property?

    Advocates of other asset classes might not agree with this quote but it’s true, and not just because our world has got only 510 million km2 of real estate. The truth is that real estate offers both entrepreneurs and investors a path for low-risk, a long-term investment which can benefit them more than stocks, shares or investing in a company based in Silicon Valley.

    1. It’s safer, easier, and more stable

    When compared to other asset classes, real estate wins because of one thing; real estate industry is far less risky and volatile. It’s more stable, especially for people who invest in rental properties. As a real estate investor, you will continue getting a steady stream of income through rental properties, even in a slow economy.

    2. You save money through tax-breaks & depreciation

    One of the most important benefits of investing in real estate is the tax breaks. A lot of governments actually reward property owners. For example, you can write off interest payments, property management fee, maintenance, depreciation and building write-off against the income that property generates in Australia. In Dubai, instead of property taxes, they have a monthly municipality tax. You have to pay 10% of rental income for commercial properties and 5% of rental income for residential properties. Because of these tax breaks, you will be able to retain more income from your real estate investments compared to other investment options.

    3. You make money through appreciation

    Steady income from rents and tax-breaks is nice but these are secondary reasons to invest in real estate. The primary reason is appreciation. The value of your asset is going to increase over time. If you bought your rental property using a mortgage, then it’s basically your tenant who would be paying back your loan along with interest to the bank. Over the years, you would have a valuable asset to your name without $0 investment.

    4. Demand for houses outstrips supply

    Good housing has been in demand forever and with the world’s population increasing steadily, there will be a gap between the supply and demand for real estate. You can invest in real estate and be on the supply side rather which dictates the price and make a profit because of this gap. Besides that, there are always markets which are hot, where people “want” to live because of the location, job opportunities, future development projects, amenities, etc. What it means is that if you invest in the right property, you can make a profit even when the real estate market is sort of down.

    5. You can negotiate on pricing

    When you invest in shares market, you will be buying or selling them according to the market price. You can’t negotiate on its price. Investing in real estate is totally opposite to this scenario. You can and should negotiate everything, which basically means better investment opportunities for you. As a savvy buyer, you can purchase properties well below market price if you utilize your negotiation skills, professional network, and market knowledge. If you are flipping houses for a living, then you can sell that house for a much higher price than market if you play your cards right.

    6. You are in 100% control

    No one likes giving someone control of their destiny and the primary reason people work in real estate is for freedom, from bosses, from 9-5 jobs, from relying on brokers to handle your trades, and from overall uncertainty of things. You are in charge as a real estate investor. Want to manage your properties yourself? Great, you can do that. Don’t want to? Not a problem, hire a professional property manager who can take care of your property for you.

    7. You can benefit from city development plans

    The value of the property is often determined by where that area is headed in next 5, 10 or 15 years. As a real estate investor, the value of your property might get a boost because of a development plan like building a highway, a new university, a hospital, a shopping mall or a park in the vicinity. These amenities will enable you to sell the house for a much higher price than what you bought it for. Basically, you can benefit from spendings of other people as a real estate investor.

    8. You can invest in a variety of ways

    Real estate is an extremely flexible industry in terms of investment options. It offers something to everyone.

    Whether you want to invest for short-term gain or are in this for a long-haul, you will find an investment strategy suitable to your financial goals. Here are a few investment strategies used in real estate:

    Home Flipping (Short-term)
    Rental Properties (Long-term)
    Lending (If you have money
    Vacation Rentals (Seasonal)
    REITs
    Wholesaling
    9. You can get financing relatively easily

    Banks love real estate. That is why home loans are a major part of their business model. As an investor, it’s going to be much easier to get financing for residential houses than any other asset class and the reason is it’s tangible.

    10. You can diversify your portfolio

    Diversification is a risk-minimization technique and real estate, because of its low volatility and steady cash flow, can really help investors balance their investment portfolio. Investing in real estate, especially for long-term, is a pretty safe option. Compared to stocks or shares, the real estate market doesn’t change overnight. It takes time and usually, there are trends/patterns which develop over years that indicate where the market is headed. According to Investment News, the average real estate cycle is 18 years and the next correction shouldn’t be until 2026. The cycle duration is based on an analysis of the past 200 years of real estate data.

    But before you get started as an investor, you should learn the techniques and skills that are necessary to be a successful real estate investor.

    https://www.quora.com/How-do-I-convi...wers/119847050

  2. #2
    Join Date
    Sep 2021
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    1

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