We work long hours to provide for our bare necessities and one of those bare necessities include setting up our home. No one can deny that for most people, buying a home is the single biggest investment that one embarks upon in their life. A home is an integral part of our lives; therefore, it becomes a big part of our investment portfolio.
Investing in real estate is considered to be an “alternative” investment class in terms of portfolio investment. In lay man’s term, it means that real estate investment is considered a supplementary investment in addition to stocks, bonds and such other forms of securities. This tangible form of investment however, does not come sans excess efforts on its owner’s part. He or she needs to substantially investment in maintenance costs, as well as pay taxes and mortgage, if at all involved.
However, if you are exploring options to invest in real estate, it will be handy to know about the various options that exist that would prove to be worth your while. If you seek to make a high net worth investment, it is quite a good choice to invest in income producing real estate- an option that life insurance companies, Real Estate Investment Trusts (REITs) and pension funds invest in.
Investors purchase income properties such as smaller apartments, houses or condos, and then rent them out to tenants. This way, the property will be helpful in ensuring neat profits as return on investment. If you have to pay mortgage for your property, and don’t want to charge excess rent to the tenant, even then you stand the chance of benefitting in the long run. Once the property mortgage has been paid off, you could then go on to make a profit from your real estate investment, even after paying off the maintenance cost and taxes. What more, it is a long term, almost lifelong proposition- as you can go on renting out your property to tenants as long as you may want.
Like stocks and bonds, the valuation of a property varies and changes according to times. Therefore, it is wrong to assume the same profit off it at all times. Nevertheless, in most cases, the type and location of the property is extremely essential, when it comes to reaping profits from your real estate investment. It is good to note here that, different type of real estate isdriven by different and diverse set of challenges. One cannot simply assume that when one type of property is doing well in the market, a different type will fit the bill too.
Also, property may have fare good or bad in the past, and based on those lines, it is unwise to draw conclusions from prior inference that it will continue to do so in the near future. The real estate market is as volatile as any other forms of investment and investing in it is also a matter of taking chances, very akin to the risks faced in stocks and bonds.