Many people say that real estate investment is better than any other finance sector investment. Yet, it turns out that each investment has its own advantages and disadvantages.
Knowledge on this field is very necessary for an investor so that an investor to be can consider steps to anticipate any loss and add value to the property. Here are eight advantages of property investment.
1. Added Value
The added value of property investment is acquired as a result of the development of the buildings on the vacant lot. The added value will be higher if the structure is located in a strategic location with good access and facilities, as well as made with beautiful architecture.
2. Income Appreciation
From a plot of land being developed, vacant land becomes a house or shop, an investor can receive rent. Another advantage is the increase in rents, due to the nature of the scarcity of land and property will continue to occur throughout the economy in a country continues to grow.
3. Capital Appreciation
Appreciation of the value of land is another advantage of the investment property. The number of people at all times continue to increase, while the amount of land can not be increased. This is simply a classic theory to explain why land prices continue to creep up from time to time.
4. Long Term Investment
Compared to deposits, gold or other investments, property has a durable character. Property business has an investment horizon (period of time) of 3-5 years at average. That is, after 3-5 years of growth it is enough to generate significant capital gains (the difference between purchasing price and selling price).
5. High Leverage Investment
For example, you are investing in real estate with $10.000 as a down payment, then you could have an investment of $50.000 or five times, because the remaining $40.000 is paid using bank financing.
If the value of the investment rises 10% to $55.000, then you gain @5.000 or 50% of the initial investment that is only $10.000. This is called the high leverage real estate investment.
6. Hedge of Inflation
Traditionally, people buy land and buildings to maintain the investment in order not lost by inflation. That is, owners are sure to buy the property, the value of the investment will not go down as the value of the currency which is eroded by inflation. In fact because of the nature of its rarity, the value of the investment continues to increase steadily over time.
Unlike financial investment, a real estate investment is a collateral or guarantee which is the most solid. Even in some countries, the banks do not hesitate to lend up to 80% of the value of the collateral.
8. Pride of Ownership
Compared to other types of investments, a sense of pride in the ownership of the property is generally higher. So long ago, landlords were associated as the rich. This is because properties can also generate income from rents.
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