At a first glimpse, investing in real estate might seem challenging but only because this form of investment is different than stocks and bonds. Some claim that real estate is riskier than stocks or bonds; others don’t invest because they know nothing about the industry. Truth be told, real estate can render incredible returns. However the key to making a profit is to take things slow. Stick with the basics at first and stay away from flipping properties which is indeed a challenging investment approach for beginners.
In the last twenty years we’ve seen this industry fluctuate. The opportunities to make money with real estate are endless; but then again, one must get to know the market first, ask for guidance and learn to stay away from deals that seem too good to be true.
Real estate vs. stocks
When investing in real estate, you buy a physical property or land. Some will require extra cash for maintenance and taxes; others generate cash. Rental houses, apartment buildings and homes can be a true money-maker. However, it is important for investors to manage their properties wisely in order to see a good profit. Verifying on tenants to make sure they pay their rent and expenses on time is key.
With stocks, things are a bit different. Investing in stocks means purchasing a small piece of a bigger company – whether that company sells furniture, makes video games, manufactures bikes, etc. As the business evolves, you are entitled a fixed share of the profit. If the company has 2 million shares and your cut is 10,000 shares, your profit is 1%. Needless to say, stocks are a risky form of investment because the company you’ve invested in can go bankrupt. This means you lose everything.
With real estate, this can’t happen. The property you bought is yours no matter what, and you’re at liberty to do whatever you want with it.
Benefits of real estate investing
Certain benefits are associated with investing in real estate. First and foremost, real estate is a lot more secure than stocks and bonds. It is a comfortable form of investment meant for both lower and middle class groups. Many people appreciate the importance of owning a home, which means they’re a lot more open to buying land rather than spend money on stocks and bonds.
Furthermore, real estate is a tangible form of investment. It can be seen, looked at and felt. For some people, this has a psychological benefit. As opposite to stocks and bonds, scams are almost inexistent when buying property. Of course, before spending any money you need to do your homework to make sure you’re investing in a property or land with great potential. Inspect the property before buying it, run a detailed background check on previous tenants, and do repairs yourself. With stocks you can do all this because you’re compelled to trust the auditors and the management team.
Real estate and bonds
Bonds are considered safer than stocks. However, the safer the bond the lower the return on your initial investment; government bonds in particular, are often regarded as risk-free investments. However the yields are very low and many people don’t want to devote their lives to investing in bonds only to take advantage of a very small profit margin. Bonds feature a fixed interest rate, and inflation can decimate returns on safe bond investments. Rental property on the other hand, generates higher profit margins in inflation periods. Higher labor costs often lead to increase housing costs; and as a consequence, higher rents. Generally speaking, inflation drives up property costs. This means you have the chance to reap cash flow rewards, as well as build appreciation in time. A bond’s value is static, whereas with real estate you have higher chances of boosting value through appreciation.
Investing in real estate doesn’t have to be complicated. It all comes down to having the courage to take a small risk. Owning property or choosing to invest in property in Kalkan comes with a wealth of advantages, and no matter what happens you are still left with something. Stocks and bonds are virtual investments; they can’t be touched and if something happens you risk losing everything.