Everyone dreams of owning a home of their own and their own property. But ever since the housing market crashed, questions have been raised about the advantages and disadvantages of owning your own home and whether or not you should invest in real estate. However, a recent report by Bankrate showed that 25% of Americans say real estate is the best way to invest money for long-term investment. Real estate for many investors is a tangible good and feels more real.
So, why do Americans prefer to invest in real estate?
There are many reasons why so many Americans prefer to invest in real estate. A real estate investment is the purchase of a future income stream from property. It is a way to produce extra, stable income. Many Americans want a content investment, something that benefits them in the future. That is why investment in real estate is their choice and they are able to later use the property for retirement or provide housing for their children.
Both the stock market and real estate have their ups and downs. However, in the end Americans prefer the safer route and for the majority, the safer route is to invest in real estate. Growth in real estate has been faster than the growth of many other investments. People who invest in real estate tend to have more control over their investments.
Related: The Tool that Eliminates Fear of Investing in Real Estate
What about stocks?
While it may seem like the stock market is the best way to invest in your money, many Americans remain fearful of the stock market’s short-term volatility and would rather give up higher long-term returns than take the risk. The stock market is very come-and-go. One day you’re in, the next day you’re out. Whereas real estate flows much more naturally. While you’re more likely to make more money using the stock market correctly, it’s better to have a lot of cash and security than a lot more cash and the thought of losing it all suddenly. There are no guarantees with the stock market, while real estate provides much more stability.
Is real estate a good investment?
Real estate investing is the best of both worlds. Are there some risks? Of course. But you are getting tangible money quickly and in reasonable payouts. When you invest in real estate, you typically aren’t receiving thousands of dollars in your lap every month; unless you’re really good at it and have tons of property. But you also aren’t bringing money at a slow pace either. You have a reasonable amount of money available at any time and it is coming on schedule. The great thing about real estate investment is that it allows you to sit back and enjoy life in the moment.
Related: Is real estate a good investment?
Investing in real estate can produce an ongoing income source that can increase in value overtime. Many Americans use it as a strategy to build up their wealth. However, like everything else in life it comes with risks. Unlike other investments, real estate requires maintenance. You will need to spend money to take care of your property so that is continues to provide for you a source of income. In order to successfully invest in real estate, you have to be careful not to fall into traps along the way. Take these points into consideration:
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Before investing in anything, always PLAN
Many investors make the big mistake of not planning beforehand. They buy a house with a good deal, believing it’s the best decision they made. Yet when it comes to making money from the property, they don’t know how! As Andy Heller says, “First, you find the plan, then you find the house to fit the plan. Pick your investment model, and then go find property to match that. Don’t find the strategy after you find the home.”
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Don’t pay too much
Another big mistake investors make is that they pay too much money for a property. This is wrong because when you want to invest in a property you want to have positive cash-flow. Investors get surprised when they don’t make more money on a property they paid so much on. So start small to make big income.
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always be prepared to purchase your investment
When you want to invest in real estate, it’s important to know your budget before looking for a property. That’s why many agents recommend getting pre-approved for a loan from the bank before even looking for a property. Once you’re aware of the budget limit, do your math homework. Know every possible expense and include them when calculating your monthly cash-flow. The goal is to have positive cash-flow every month. It’s also important to have extra cash on the side. Whether you financed the property using a mortgage or cash, a cash cushion is needed for unexpected costs.
Related: Buying Investment Properties With No Money
It’s better to be safe than sorry, and we think real estate investment is the safer way. But always keep in mind that in order to succeed in any kind of investment, you must always do research ahead of time. Use Mashvisor to expedite this research by quickly finding the best cities, neighborhoods, and properties for your investment.