Truly, real estate is a goldmine, arguably one of the best sources of extra income. However, it’s not a get-rich-quick venture. In fact, sometimes, real estate investment takes time to mature. Like every other form of investment out there, opting for real estate comes with its own risk too. This is why it’s important to anticipate the challenges that come with it – not to scare you off, but to rightly prepare you for the competitive market. Hence, let’s consider the pros and cons of real estate investment so it can spur you to make informed and strategic decisions as you proceed in the business.

The Pros of Real Estate Investment

Like any other form of investment, taking on real estate in your portfolio has its pros and cons. Some of the biggest advantages (pros) of investing in real estate are discussed as follows:

The Value of Real Estate Property Appreciates Over Time
Real estate always has an intrinsic value, and that value appreciates over time. What’s even better is that the rate at which real estate appreciates generally beats the annual inflation. Once you’re able to procure quality property and make improvements to it to increase equity, you can eventually sell the improved property for a profit. Even though stock prices can take a nosedive and the market can crash, but a property is a tangible asset whose value derived from both the raw land and the “improvements” made on the land.

Real Estate Provides a Steady Cash Flow
In addition to being an asset whose value grows over time and with improvements, rental properties also are a reliable source of monthly income called “cash flow.” Put simply, cash flow is the extra money retained after all expenses have been settled. If your property is leased, it can provide regular cash flow, such as a monthly passive income which you earn while you spend your time working on other things such as a full-time business, vacationing, or even reinvesting in more real estate.

Real Estate Gives You Control
Compared to some other types of investment, real estate gives you the power to exercise more control over your overall investment success. Most times in the stock market, shareholders hardly have the power to influence the value of their stocks. However, as a real estate investor, you are more involved in decision-making, such as the type of assets to acquire, and the deals to take. Also, you can make strategic improvements to your rental property to enhance the rental fee.

The Cons of Real Estate Investment

Even though real estate investing is a lucrative venture, it also has its downsides and risks which every prospective investor should consider carefully before starting. Some of those “cons” are discussed below:

Real Estate Can Be Capital-Intensive
Just like every other venture, real estate requires a tangible amount of startup capital. To get started, you’ll need a down payment and other forms of expenses to repair and “improve” the property to maximize rental income. After a successful acquisition of the property, you’ll also have to take care of recurrent costs like property taxes, insurance, and property maintenance.

Real Estate Requires Time
To succeed in real estate investment, you need to spend considerable time learning the market basics and managing your acquired property. Most times, picking out a profitable property require mastery and adeptness, as you can lose a lot of money in real estate if you don’t know the ropes. In addition to the aforementioned, actively managing your rental properties also requires time and effort.

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