The investment in real estate is worthwhile – but probably a well thought out meaningful building block of a wise compiled investment is the property. The real gold may also be designed as a natural product in the form of building land, farmland or forest. You can use it yourself or make a profit from the rent. But as with any investment, there are lurking risks. Black Castle explains to you when it pays off for you to invest in real estate – your own home and or investment property – list pros and cons, and tell you what you should look out for in your investment.
Advantages Of Investing In Real Estate
In the current period of low interest rates, it is worthwhile to buy a property for rent, even when the property you purchase sinks in value. Experts have calculated this issue since April 2015 based on a loss of importance of 20% in 20 years. In the end, the real estate buyer still had a higher fortune than the tenant.
Rising Prices In City Locations
The increasing tendency for future real estate prices in the cities and outskirts relies on attractive infrastructure (transport links, shopping, doctors density, kindergarten care, recreational opportunities including nature). Village and structurally weak regions, on the other hand, are already struggling with declining populations and the resulting loss of value.
Tip: Even as a private investor is probably well advised to take a closer look at the real estate decisions of brokers and draw conclusions for their own choices. On the other hand, even real estate professionals are not immune to wrong decisions and can also tumble when bursting a real estate bubble into ruin.
At The End, Stand Better Than The Tenant
If the purchase price of the property remains constant over the years or even rises, the real estate buyer enjoys at the end of a much higher fortune than the tenant. In addition to the numerical superiority, a qualitative advantage is added: a buyer must save, this is forced by the mortgage loan. A tenant who puts his belongings into fixed deposit always finds himself tempted to spend a bit more money on the next vacation, the bigger car, the expensive suit etc., instead of leaving the funds in the savings box.
Disadvantages Of Investing In Real Estate
Properties aren’t always the same. It always depends on finding a valuable feature. Any repairs must be included in advance. In the case of a yield property, it is essential to answer the question: is the rent per square meter still worth it, even if the administration and ancillary costs are deducted from this?
High Purchase Costs
Essential for both self-employed property buyers and landlords: Buying a property initially cost between 10 and 15 per cent of ancillary costs. If the property is to be sold quickly again or external circumstances (divorce, relocation by job change) make this necessary, high losses can result from a resulting emergency sale.
Long Commitment Period, Little Dispersion
The psychological advantage of the austerity has – like everything on earth – two sides. Capital is tied up in a long-term real estate and cannot be quickly redeployed. Since many home buyers and home buyers put their entire savings in the property, there is no room for a risk-minimizing diversification of their own savings capital.
Also, the sale may be delayed even if the property market itself is booming. The particular property may have disadvantages that make it harder to sell. Here the seller needs a long breath if he does not want to strike with a discount.