The truth about real estate investment: is it safe or not?

Investing in real estate can be an excellent way to grow your wealth and work toward financial independence. However, most people know little to nothing about the industry, which leaves them vulnerable to all sorts of schemes and misinformation from dishonest, unscrupulous brokers and agents who want to take advantage of them. As you enter this market you will see different land for sale but without any knowledge, it's not safe to go for investment.  In this guide, we’ll be helping you sort out the facts from the myths so that you can invest wisely in real estate without getting scammed or ripped off.

Pros of real estate

Investing in real estate can be a great way to make money. If you invest wisely, you could build a healthy and sustainable income stream that will increase with inflation. When done responsibly, buying a home and renting it out to others can provide the comfort of living mortgage-free while still generating an additional income stream to help pay your bills. You might also be able to enjoy significant tax benefits when investing in property. So you can go to buy land for sale.

Cons of real estate

If you're thinking of investing in real estate, there are some things to consider before going in. Firstly, location and timing are of the utmost importance. If a property market happens to be coming out of a long slump (e.g., Detroit) then this may not be the best time to jump into the market. Similarly, if rents just went up and show no signs of slowing down, now might not be the best time to purchase property because renting it out will require some hefty monthly expenses.

Investing in stocks provides higher returns

Investing in stocks provides higher returns than investing in the real estate market.

Investing in stocks may be riskier, but if you keep a close eye on the fluctuating prices and sell before it bottoms out, your money may grow.

Stocks are more volatile than other options

Buying stocks is different from buying a house, in that stocks are inherently more volatile than other options. If you are patient, there are plenty of reasons to buy stocks. There's the argument that most people only really need one house and because of this have a lot more options when investing their money. Though with stocks, the rate of return will always be unpredictable and can go down just as easily as up. Still, if you choose to buy stocks your risk-reward profile looks better over time because so much more money has been made than lost on the market.

Recession is frequent

Times are tight and many people are struggling. It can be tough to focus on the future when bills need to be paid now. A surefire way to get rich quick is by investing in real estate, right? Unfortunately, there are few guarantees in life. Investing in property can be a great idea, but if you don't know what you're doing, you could also lose your shirt. And while you might buy a home for cash with your savings account, chances are that's money that could otherwise have been invested elsewhere. 

Companies can go bankrupt

If you're considering investing in a new building, for example, there's no guarantee that the project will be completed and ready for tenants when promised. If it takes a long time to get up and running, other investors may lose patience with you. Meanwhile, if the developer goes bankrupt while your project is still on the drawing board and plans haven't been finalized, those plans may never come to fruition. This means you could have spent all that money on land without any payoff down the line. The bank has your money whether or not they finish your project; so if they have financial problems at some point in time after taking your money as well as theirs, they'll just close up shop and walk away.

For every high return, there’s also a risk of losing everything

You might be reading this with a bit of scepticism, but that’s because you’ve done the math and understand the risk of real estate. In return for every high return, there’s also a risk of losing everything. To put it in perspective, if you buy a property for £100,000 and sell it in 10 years for £200,000, you made 100% of your money. Sounds great! But when the property only goes up by 5% instead of 50%, you would have made 25%.

Always search and get some knowledge before going to search for property for sale.

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