investing articles businesses business management business marketing Technologies finance accounting Industrial Manufacturing starting a small business Investment health information

Pros and cons of investing in real estate

The number of people who invest in real estate has grown significantly over the years, and for good reason. It can be a very good way to make money.

There are many ways you can invest in real estate. Some of the more common include:
- Purchasing foreclosures. One way to invest in real estate is to purchase foreclosed properties or land, ideally for less than it is actually worth. Then, the buyer fixes it up and then sells it or rents it out.
- Flipping properties. Flipping properties involves purchasing a home in need of major repairs and then completely redoing the home. After the renovations are made, the home is then promptly sold for more money.
- Paper real estate. With this type of investment, you invest in the mortgages of real estate instead of the actual, physical real estate. This is typically done by financing second trusts, buying discount mortgages, wraparound mortgages, and so forth.
- Rental properties. These retail properties typically need very little done to them; you simply buy them and rent them out.

As with any type of investment, there are a number of things to take into consideration when it comes to real estate investing. If you are considering investing in real estate, keep in mind the following pros and cons.

Pros of real estate investing
- Many options. The above are just a few of the options available for people who want to invest in real estate. Virtually anyone with a little down payment or equity can get started in real estate and begin making money and building up their wealth a month at a time.
- High income potential. People who flip houses, for example, can make more than $100,000 on each home once they have sold them. And those who are renting are having their rental property paid off for them completely; once the house is paid off, the owner has no mortgage, meaning the entire cash amount of the house is theirs once they sell it.
- Little expense. Aside from the initial qualification and down payment, if you are renting properties out, as many people do, a well-taken care of home will result in few expenses for you as landlord.
- Less risk. Some forms of real estate, such as paper real estate, can give you a large return on your money with much less risk than the stock market.

Cons
There are a number of cons when it comes to real estate investing as well, including:
- It takes money to make money. You will already need good credit and cash stashed away if you plan on purchasing additional properties. In addition, those who are fixing up homes will need money to make the repairs.
- You never know what to expect. This is especially true for those flipping houses or buying fixer-uppers. An unforeseen problem with the house could end up costing tens of thousands to repair, making it so by the time you sell the house, you will barely break even.
- Fluctuating market. The housing boom fluctuates often, and many say it is on the downswing. Real estate investors should be prepared for this before investing heavily.

Real estate investing can be very lucrative, if you know what you're doing. Make sure you take all pros and cons into consideration before you begin your investing.


FREE: Get More Leads!
How To Get More LeadsSubscribe to our free newsletter and get our "How To Get More Leads" course free via email. Just enter your first name and email address below to subscribe.
First Name *
Email *


Get More Business Info
Sponsored Links
Recent Articles

Categories

Copyright 2003-2020 by BusinessKnowledgeSource.com - All Rights Reserved
Privacy Policy, Terms of Use