Do you regularly waste away in front of the newest real estate shows? Do you dream of becoming a house flipper or building up your portfolio with a collection of gorgeous properties?
We admire your ambition, but it’s time for a quick reality check. Investing in real estate can be a fantastic decision, but it also comes with some potential drawbacks.
Keep reading as we discuss the pros and cons of real estate investing.
Pros of Investing in Real Estate
Perhaps the most obvious benefit of investing in real estate is that it appreciates over time. Although the market does fluctuate over time, it’s almost always possible to buy, improve, and sell a property for profit.
Real estate also offers significant tax breaks (who doesn’t like owing lower taxes every April?) while you build equity. If you rent out the property, you’ll also gain a steady source of cash flow from your tenants. And when you need leverage for a business loan or another financial endeavor, real estate provides the foundation you need.
Real estate investing is also great because it puts you in complete control of the decision-making process. For example, are you thinking of investing in real estate in North Carolina? You can learn more here about the current market and decide whether now is the best time to buy.
A final plus we’ll mention is that real estate is good protection against inflation. As the average cost of living goes up, so too do rental prices and property values.
Cons of Real Estate Investments
Before you can get started in real estate investing, you’ll need plenty of cash on hand. At the very least, you’ll need to come up with the downpayment and closing costs. There are also the ongoing costs of maintenance, insurance, and property taxes.
Another potential drawback to real estate investments is that it takes a lot of time and patience. Real estate is not a “get rich quick” scheme — rather, you have to be willing to play the long game and wait to reap the benefits.
Of course, there’s always the chance you’ll get nightmare tenants that destroy the property or suck you into a legal battle. Paying for the eviction process and repair work can eat up a lot of time and money.
And, like other types of investments, there’s always the chance you could buy the wrong property at the wrong time. Many investors learned this the hard way when the housing bubble burst back in 2008-2009.
Hopefully, we aren’t heading in that direction again, but you need to be aware of everything that could go well, as well as everything that might go wrong.
What Will You Do With These Real Estate Tips?
Investing in real estate is not for the faint of heart! It can be a huge boost to your portfolio, but like any other investment, there’s also some risk involved too.
Before you pursue any real estate investments, make sure you’ve weighed the pros and cons listed above.
Now that you know when and how to invest in real estate, what’s next? Keep browsing our site for more great business and real estate advice.