Real estate is an investment that can provide stability, security, and consistent income. Real estate investment can be a great way to create wealth and build a secure financial future when done correctly. A number of benefits of investing in real estate often goes unmentioned, so we’ve put together this list from firms like Nelson Partners to show you some of the hidden advantages that come with owning real estate:
What is Real Estate?
Real estate is defined as any property that comes with ownership rights, including buildings, land, and something permanently attached to the land. Most people are familiar with residential real estate, but there are also commercial properties. A “commercial” property is one that is not a primary residence or place of business for an individual or family. It is used by companies or other organizations in order to make money. Some examples include malls, shopping centers, and property where large companies are located.
What are the Types of Real Estate?
There are many different types of real estate, including commercial properties and non-commercial properties.
Commercial Properties – These are buildings that have been built with the specific intent of being used in some type of business venture. Office buildings, warehouses, and storage facilities would be considered commercial properties.
Non-Commercial Properties – These are buildings that have not been developed specifically for business purposes. These types of properties would include residential homes, condominiums, and farms.
What are the Advantages of Investing in Real Estate?
When you purchase or own real estate, you are buying something tangible. You are making a long-term investment in something that is likely to last for decades. Unlike stocks, bonds, and other types of securities, real estate does not have an expiration date.
What are the Disadvantages of Investing in Real Estate?
Real estate has many advantages, but not without its disadvantages. First and foremost, real estate is costly. Purchasing a home or commercial property can eat up thousands of dollars in due diligence expenses, closing costs, and legal fees.
How Can I Start Investing in Real Estate?
Many individuals who are just starting to invest have no idea where to begin. The best place to start is by investing in real estate with others who have more experience than you. There are many ways of doing this, including:
– Brokering deals between buyers and sellers (also called wholesaling).
– Working with partners on large projects (also known as flipping properties or rehabbing buildings)
– Subcontracting for other real estate investors
– Investing in real estate through a company that provides investment opportunities (such as the Nelson Partners REIT)
What are the Risks Involved in Investing in Real Estate?
Any investment always carries some degree of risk. When investing in real estate, there are a number of risks that should be considered, including:
– The property not selling or earning the expected rate of return
– Getting stuck with expensive repairs after purchasing an old building
– The potential for extremely high interest rates on loans used to purchase properties
– The potential for an economic downturn to lower demand and decrease the value of your property
– The chance that you may lose money if you invest in real estate with others who do not have your best interest in mind
Real estate is a stable investment with many advantages. However, there are also risks involved. Make sure you are aware of these before investing.