Why Invest In Real Estate?

Jul 29

Why Invest In Real Estate?

It is often assumed that real estate is a safe investment and that an investor can make quick money.  If this is what you believe, then this article is for you.  Real Estate is a good investment in the long run and can be profitable over time.  It is not a get rich quick investment.  It is not for everyone and it is not always a good experience.  So many people now a days have lost their homes, rental units and commercial properties to foreclosure.  Some people have destroyed their credit and built mountains of debt.  For them, real estate was the worse possible move and a lesson learned with tears.  For others like myself, real estate is a good investment with the potential for great profit.  However, it does not happen overnight, within months or even a few years.  It’s a slow but steady road built on patience!

Real estate can be a prime investment in times of recession. In times of financial uncertainty, real estate investors should focus on cash flow rather than appreciation. Cash flow is easy to see—the numbers either work from the start or they don’t. (NuWire Investor)

Investing in real estate should be for:

  • Building equity
  • Producing a steady flow of alternate income
  • Building your portfolio
  • A contribution to your retirement fund.
  • Tax benefits
  • Tax deductions
  • Financial security
  • Cash flow
You should not invest in real estate if:
  • You don’t have money to afford the investment.  “It takes money to make money,” is the best saying in the world!  Once purchased real estate comes with its own set of overhead.  It takes money to maintain the property and renovate the property. Expenses such as mortgage, taxes, water and utilities must be paid. If your are fortunate and your property is income producing from the start then great, extra money always helps.  However, with tenants comes headaches – plumbing issues, heating issues, electrical and cosmetic issues all cost money.  In real estate,  it’s always a safe bet to have an “incidental stash” – money set aside for when everything goes wrong.  Some say that incidental money should cover expenses for six months to a year.  Realistically if you are just starting out you might not have that – I did’nt.  What I did have was enough money in the beginning to make all repairs and renovations up front and avoid breakdowns later.  For the cosmetic breakdowns I had a small stash and focused heavily on producing income so my stash would not become non-existent.
  • You do not have patience.  Real estate is a very slow process.  Once you finally close, you now wait on contractors to make repairs, then advertise for rentals, screen tenants, move them in, chase the rent and sometimes move them out.  If patience is not your virtue I highly suggest you hire a property management company to handle the day to day routines of your investment.
  • You have big dreams of riches and grandeur.  No one gets rich overnight in this industry.  So if you believe you buy today and are rich tomorrow – DO NOT INVEST IN REAL ESTATE!
  • Your financial status depends on this investment.  The housing market is on a roller coaster and it would be foolish to stake your entire  livelihood on this type of investment.  Have you ever heard the saying “house poor,” well then don’t become a poor investor!
In theses economic times of hardship, Real Estate is still our saving grace.
Today is probably the best time to invest in real estate, for one reason: Higher mortgage interest rate = Lower real estate demand = lower price tag.
(Money& Minds)
However, make sure the timing is right, your finances are in order and that you do your due diligence.  Learn about the market, hear the stories, and make your plan of action.  Whether it’s today, tomorrow or next year real estate is not going anywhere.  As long as there are people on this earth, we will always need a place to sleep, eat and work.  Property, in all it’s forms (caves, huts and igloos) like roaches will outlive us all.  So, why not invest in something that will be income producing for centuries and long after your gone?
I’m just saying ….. Rest in Wealth

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