By Drew Allen
If you’re looking to diversify your investment portfolio with relative ease, you should look towards investing into real estate shares. Investing into real estate shares is pretty similar to the typical stock market. You purchase a couple of stocks, and that’s that. However, there are a few key differences between the two. Compared to traditional stocks, real estate shares are a part of a constant stream of income. Specifically in regard to rental properties. As a result, people tend to lean more towards this as it’s a safer investment. But this also comes with its own risks as well as cons. In this article, we’ll be going over the pros and cons of investing into real estate shares.
Pro: It’s an Amazing Long-Term Investment
Investing into real estate is often considered to be one of the best long-term investments for many reasons. To start, real estate comes with more security than the average investment. Over time, the building will appreciate. Appreciate is a term used by investors that means to build value over time. This is where the similarities to the traditional stock market come into play. But compared to the stock market, which has a tendency to crash from time to time. A stock market crash is where the overall rates plummet. This causes your hard-earned investments to not only lose value, you can also lose a lot of money. Real estate doesn’t have this issue. In fact, you can even wait for the building to start accruing value before you open it for people to rent.
Con: You’re Going to Spend a Lot of Time on This
When we say that investing into real estate is a long-term investment, we mean it. Aside from waiting for the building itself accumulate value, you have to spend a good majority of your time learning the ins and outs. Learning isn’t exactly a con, but the process can be very time-consuming. Furthermore, you could potentially lose money at first, depending on the building and shape it’s in. A rundown building can cost thousands upon thousands to redo. You also have to spend resources ensuring the building is maintained at all times. However, the time spent managing this property of yours is typically well-worth the effort.
Pro: You Can See a Large Cash Flow
On average, most rental properties come with a stable cash flow. Cash flow is the extra money that’s left over once all the necessities are paid off. You can even consider this a form of passive income, which means extra money in your pockets every month.
Con: The Potential Risks
Despite being incredibly safe for an investment, there’s always a few risks to be cautious of. This includes before you even buy the property. One risk you wouldn’t expect to deal with is purchasing the property at the wrong time. In real estate, timing is everything. An improperly timed investment can lead to a loss in cash. Things like high inflation rates can impact the housing market significantly and you need to be advised of that type of ebb and flow.
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