Advantages of investing in real estate.
Consider the main advantages of investing in real estate.
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1. Real estate is traditionally considered one of the most reliable investment tools, because most often it either increases in price or the price stands still. In addition, real estate cannot fall in price to zero (like many other investment objects, for example, securities), if there is a drop in real estate prices, then it does not happen so significantly.
2. Real estate is a "tangible" investment object that is clearly visible and can be touched, unlike other forms of investment that involve investing in much more virtual assets.
3. Real estate can be used at any time for the investor's personal needs, for example, he can live in it, or have his business (present or future), if it is commercial real estate.
4. Real estate investments involve two ways of possible income generation: passive rental income or speculative resale income.
5. Investing in real estate once makes it possible to receive passive income from renting for the rest of your life, that is, it can be a long-term investment.
6. A real estate object can always be sold, donated to relatives, inherited, used as collateral in a bank, etc.
7. Real estate investments assume a very low risk of capital loss (the risk of total loss when investing in real estate in the secondary market tends to zero), which is the most indisputable advantage.
These were the main advantages of investing in real estate, and now let's look at the disadvantages.
Disadvantages of real estate investments.
Now let's look at the main disadvantages of investing in real estate.
1. Passive income from renting out real estate is quite small in comparison with the amounts of necessary investments, in many cases it may be even less than the profitability of bank deposits.
2. Real estate as an investment tool has very low liquidity. This means that in order to sell it, if necessary, at a favorable or even just an average market price, it may take months or even years.
3. Investments in real estate entail additional costs: payment for the services of realtors, notary services at the conclusion of a purchase and sale transaction and state duties, which together can result in very substantial amounts (up to 5-10% of the value of the property).
4. The real estate itself, after purchase, also entails additional costs: payment for utilities, security services (if it is commercial real estate), capital and maintenance costs, if necessary, in some cases — property tax, etc.
5. Investing in real estate involves the presence of a fairly solid capital, which makes this type of investment inaccessible to a wide range of private investors. However, this condition can be mitigated if you invest in real estate under construction (at the construction stage, the cost of real estate is significantly less) or in inexpensive objects, for example, garages, cottages.