There are many ways in which an individual can earn profit in real estate. Real estate is not like stock, where the only way you can earn money is if the stock appreciates in the value, and you sell it in the good time.
The major advantages of investing in real estate are following-
- You can enhance the value of real estate
When you buy stock, you retain it for a particular time till it becomes profitable and then you sell it. The success of stock depends upon the management of the company and their corporate success which is totally beyond your control. Whereas, the real estate investment’s success directly fall into your hands unlike other conventional investment instruments, like stocks, for instance, whose rate of returns, depend on third parties (e.g. company management).
Though the demographic and economic, impact of nature induced changes, etc cannot be controlled by you. But you can control many other aspects to boost return on investment.
Your right actions will lead to positive results.
- Real estate investing will be profitable even during recession period if done right.
Real estate is the only type of investing that has proved to be beneficial even during the period of recession provided correct steps are taken by the person. It has on several occasions, been used to effect a bail out, from financial setbacks, such as those that many have experienced during the economic downturn happening in Nigeria today. Many people have experienced that due to present economic situation, they are unsure of profitable channels to invest money. They are done with bond and treasury bills and are in search of profitable investment.
It has been pointed out time and again that even if all the businesses fall, land will always appreciate slowly.
- Real estate investments are immune to inflation
It is probably the only type of investment that is immune to inflation. In simple words, investment of money in ownership of landed property can protect you from harsh effects of inflation that usually has on conventional investments. The reason behind this is that value of real estate generally tends to rise in positive correlation with inflationary pressures. It is also the reason behind rising of rentals in houses.
Investing in real estate, therefore, offers a unique advantage of being able to adjust the rates they offer, to match inflation. To compensate the inflation, monthly rentals can be raised.
- Real estate is universally accepted as a collateral security towards loan from financial institutions
Real estate (including buildings or lands) in the form of proper titles and deeds is the most secure and recognized form of collateral all over the world. It has the major characteristic of protecting the interests of both borrower and the bank, which will ensure that funds can be released after the formal verification process, provided the terms and conditions are agreed.
- Real estate investing allows the use of other people’s money
This point is possible because real estate is physical property or what is called a hard asset. This factor makes it attractive to financiers i.e. people with money to invest. This is why many times real estate products are bought with debt .Hence, real estate investment can be done using cash or mortgage financing. In the latter case, payments can be so arranged to allow payment of low initial sums, provided by you or a willing third party.
Those payments will be happening on landed property which will continue increasing in value throughout the duration of such payments – and indeed beyond. This instills a confidence in the minds of those financing the acquisition, that their investment is safe.
- Other benefits-
Apart from the above benefits which real estate investment confer, there are many more like-
- Rental income.
- Buying low-You turn an instant profit if you manage to buy a property for under market value.
- Selling high. You can make extra money if you stage the property to attract buyers over market value.