With a few minor bumps in the road, it’s historically been a worthwhile investment when it comes to real estate. The market is projected to grow pretty much indefinitely so you’re likely going to always turn a profit in the long run, in some way or another. In today’s world, real estate is still used as a method to build wealth as a long-term investment, because, like any market, it ebbs and flows.
How Safe Is It?
As long as you pay an appropriate amount when you first buy, it should be pretty safe to assume that, over whatever period of time, the value will increase. You should consider the area when you are looking at residential properties for sale because the changes that a particular area might undergo can vary greatly and may affect the value of your house. Things like potential industrial developments close by and the useable amount of space should be considered when you are thinking of investing in a property.
Renting
If you own a property, a great way to earn money from it is to start renting the space out. This way, you are actively earning money from the property, and not just waiting and relying on the value of the house to increase. Depending on the size, you may be able to rent out the whole place to one person (Single-family renting), or section parts of the house to rent to multiple people (Multi-family renting). There are a range of factors to consider when choosing which one to go for.
Single-family homes vs Multi-family homes
Single-family homes tend to appreciate faster and can be easier to sell on, but generally earn you less. Multi-family homes mean there’s normally a source of cash flow even if a space is empty in between tenants, or if a tenant is unreliable in paying their rent. There’s generally more work with multiple tenants though, including time for communications and maintenance costs.
Don’t You Have To Be Rich?
No! It’s true that you do need some money (more than a lot of other investment strategies) and the more you have the easier it will be, but there are ways to get into real estate investment without needing hundreds of thousands of dollars. You can start small because even a small property can appreciate quickly – especially if it’s a place and area you have researched thoroughly. You can also speak to a real estate investor, who can act as a cash partner to help you put a down payment on a property if you are super strapped for cash.
Just Make Sure To Do Your Homework
As mentioned before, as long as you have fully researched a property and its projected value, then real estate is a very worthwhile investment. Things to consider include the following:
- The quality of the property – are there any signs of mould/is the house well ventilated, do appliances and plumbing work properly
- The natural area – is it close to a water source/is it prone to flooding, is it close to a fire hazardous zone?
- Accessibility – how close is the property to schools and shops? Are the road conditions good?
- Noise levels
- History of the property prices in the area
- Future developments – are you close to a different zone that can develop warehouses, factories, or schools?
Having knowledge of these things is vital in ensuring you do not get any unexpected bills, repairs needed, and potential loss in value of the house.
When Do I Buy?
So when the market crashes, prices of property go down and it’s a good time to buy (just like in the stock market). However, the cycles are much longer in real estate, so it’s almost impossible to predict or wait for a crash in the market. A crash tends to happen when demand for property is high, so more homes are built, but then demand goes right down because there are too many available. Then the cycle repeats. Other external factors can have a large impact on the housing market, but these are often unpredictable (such as natural disasters, and even wars). Basically, you should be aware of the dips, but real estate is more about looking for investment opportunities, rather than the opportunities coming to you.
Overall, real estate is definitely still worth investing in. Housing will always be needed and finding the right property could make you a lot of money, whether that’s through renting or reselling, or both. Researching and knowing when the right time to buy, for you personally, can make you a lot of money.
