The Benefits of Real Estate Investment
Investment may be risky in your brain. Yes, it is for some investment fields. In facts, the risk in the investment of real estate is limited and can be controlled. While it is profitable. Maybe you will say, I do not have much money. Do not worry, you can lend money easily if you are investing them to real estate. Too good to belive? Please read on.
The most exciting things about real estate investing are leverage and control. Let me first discuss leverage.
Let us compare mutual fund, stock and real state. Let's say you put $10,000 into investment.
How much you can buy the above invested products if you can only choose one of them? Mutual fund, $10,000. Or, stock, $10,000. Then how much real estate can you buy for $10,000 ? How about $250,000? I have done it for less.
Now let me ask: When you have $10,000 in stock, how much do get appreciation on? How about if that mutual fund goes up 5%, what do you get 5% on? $500 again!
Now what if that $250,000 house goes up 5%...you get $12,500 in appreciation. That is more than your initial investment.
Now let is look at involving OPM – other people’s money. Is there anyone at a bank that would lend you $10,000 to buy stock? I doubt it. Is there anyone at a bank that will lend you $10,000 to buy a house? You bet there is! Lenders are tripping over each other to lend you money. How much mortgage related junk mail do you get every day?
So, not only do you get appreciation on much more than you spent, but you have people willing to lend you the money to do it! What could be better than that?
How about control or knowledge.
When you buy stock in a company, what can you do to make it go up or down? Not much. I doubt you could buy enough product to affect the stock price of any public company. What about with real estate? What can you do to affect the market price of your property? Plenty! You may not really affect a whole market, but you can do a lot to a property yourself.
When you buy a stock, do you have any idea if that stock will go up or down? Not really. Hopefully you study a company and pick one that you think will do well, but there are no guarantees. Phrased differently, do you have any idea what that stock will be worth 3 months from now? Absolutely not.
How about a property you buy – do you know what it will be worth in three months? You better have a good idea! You can run a market analysis or get an appraisal any time you want, and most markets don’t make radical changes in three months, so you can have a pretty close idea what a property will be worth in three months.
That investment is under your control, because you can fix it up, add to it, or even scrape it and add another building. When you add up leverage, control and predictability, real estate comes out shining as the best investment vehicle. Of course I would never recommend it be your only investment vehicle, but you are missing out on a huge return if you are not investing in real estate.
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