Real Estate as an investment

Of course, real estate is not the only form of investment that can bring investors a long-term profit, so it is necessary to look at all the aspects and types of investments before making a decision.

Lately, one of the most interesting ways of investing is purchasing real estate for investment purposes. These are the properties which are not buying for personal needs, but for further rental, in order to secure higher yields as compared to the savings in the bank and which presume less volatility than investment in shares. Investing in real estate has become an alternative to financial investments and traditional forms of savings, especially today, when returns on deposits in banks are minimal, returns from investments in shares are quite volatile, while the real estate market has stabilized, and real estate investments have become more attractive and safer.

According to international statistics, real estate represents about 55% of the world’s wealth, which gives it a great advantage compared to other forms of investment. Investing in real estate, by default involves investing larger amounts of money and can potentially bring a higher return on investment, but it also comes with challenges, so it is wise to get familiar with the potential risks and options before investing.

The properties are bought as an investment in order to be rented to tenants. Whether it is commercial or residential real estate, in any case, passive income is guaranteed on a monthly basis. Real estate is a long-term investment, which means that over time the value of the real estate can increase and a certain profit can be generated with the sale, which is not guaranteed, so it is important to invest wisely in the right real estate properties and have regular maintenance.

Real Estate investment increases diversification for investors, it serves as a protection even in times of economic turmoil. Real estate investments are also considered as a hedge against inflation. When the prices of goods and services are on the rise, the value of the property and the amount of rent usually increase. Investment properties can provide a growing monthly income, and owning investment properties comes with other non-financial benefits as they provide owners with income without additional work.

All types of investments come with advantages and disadvantages. How can real estate be compared to the other common types of investments?

Compared to Real Estate, investing in shares and investment funds is much simpler, it is possible to invest smaller amounts of money, and their value can rise or fall faster. Compared to investing in Real Estate, shares are more liquid and can be sold more easily and thus repay your money faster.

Bonds are considered to be one of the safer types of investments, because by investing in bonds you will not lose money, but the gains are smaller.

Investing in gold has always been considered as one of the most stable forms of investing money. Gold is a limited resource and therefore always valuable. It is considered that this investment serves as an excellent protection in times of inflation, because unlike money, gold does not lose value, and the price can even increase. In fact, the higher the inflation, the higher the demand for gold, so its price also rises. However, its price is quite variable and it is not easy to predict whether this will be an investment or just a form of savings.

In the last decade, cryptocurrencies have also become popular, due to the increasingly present digital trade, which created the need for the existence of digital money that will serve as a means of exchange. Investing in cryptocurrencies is a high-risk investment, as the value of digital money is subject to huge changes and can fluctuate in short periods of time.

When making a wise investment decision, you should consider several factors, some of which are the amount of money you have available for investing, then the risk factor, the time frame of the investment, i.e. the return period of the investment, as well as liquidity, i.e. how quickly you can sell your investment again and get your money back. The variety of investments lowers the risk for the investor, so portfolio diversification implies risk diversification.

It’s always the right time to invest in real estate. Investing in commercial or residential real estate is among the most popular forms of investment for a reason and can indeed bring investors good returns, depending on the location, price and condition of the property. Nowadays, owning a property can be an excellent choice, because a properly selected investment property has good liquidity, ensures capital security and becomes a source of stable passive income.