Apart from food and clothing, shelter is one of the most basic human needs everywhere in the world.
This is why investing in the real estate market is a juicy opportunity for entrepreneurs to exploit and diversify their income.
This study shows that after five years of strong house price growth, the U.S. housing market remains strong. Demand is strengthening, and residential construction activity is rising.
The U.S. housing market is expected to remain strong. NAR projects about a 4% increase in the national median existing-home price this year. Besides, sales are forecast to grow by around 2% to 5.46 million this year and by another 4% to 5.68 million in 2018.
Here is why investing in the real estate market is profitable:
Steady Cash Flow is guaranteed
Real estate investment provides a regular income stream that is significantly higher than the typical stock dividend yields. Lief Simon said they bought an ocean-view condo on Avenida Balboa, one of the best locations in central Panama City. This unit we paid for in full…again, making payments over the term of construction. This Balboa Avenue apartment was delivered to us in 2007; we continue to own it today. In the nearly 10 years we’ve been renting it out since, it has remained 90%+ occupied, earning a double-digit return year after year…as much as 20% per year some years.
Why is it so important to have cash flow? According to Ben Givon, CEO at Real Estates Affiliates, “all companies should be aware when they start a business. Positive cash flow in the first months is probably one of the most important things that they need to consider. It is well known that lots of businesses fail in the first year because of poor cash flow”.
Serves as Collateral Security
Getting a loan to fund a sudden business opportunity for some entrepreneurs is usually tricky. Most financial institutions generally prefer real estate as collateral because it is known to appreciate in value continually. Unlike vehicles, equipment, stocks, and shares, the value of a property cannot vanish overnight. As a result, an investment in real estate means that you can use the properties as leverage to get a loan from a bank for further investments.
Low risk investment
The stock market crashes while banks going bankrupt but real estate investment does not crash. Although real estate values often fall, it is not as worse as the stock market and organizations grappling with profitability issues. Even when property values fall, income from rent is still earned. During the inflation period, economic boom, and recession, real estate investments remain robust and will most likely continue to earn your income.
Here are vital tips for investing in the real estate business:
- Do thorough research to be successful in the real estate business. This entails understanding the housing market and the merits and demerits of the real estate business. According to Ben Givon, ‘there are lots of valuable information (soft and hard copy) on real estate investment. Some of the information may be accurate, while others may be false and misleading. You need to do thorough research and consult successful investors to assist you in making wise decisions’.
- It is not usually easy to build a meaningful, diversified real estate portfolio. Purchases need to be made in a variety of geographical locations and across asset classes, which can be out of reach for many investors.
- Getting information on real estate market statistics and the trend isn’t that difficult. You should know how to find great deals, especially getting cheap houses and properties under market value from homeowners.
- Real estate investment from the internet is the next big thing. The internet provides a lot of information, including data, analysis, and reviews on real estate investment. Having a website for your real estate business is a necessity. There are lots of people looking out for real estate properties to buy, rent, and sell. You can act as a middleman by linking sellers and prospective buyers. This can be achieved by driving traffic to your site and showcasing attractive real estate properties.
- You should be able to finance any properties you want to buy. Getting short and long term loans can assist you in getting your desire properties. Also, real estate investment groups are sort of like small mutual funds for rental properties. This group can allow you to own a rental property with ease since they manage the building in exchange for an agreed percentage.
Reproduced courtesy of NewsMax