Although there are many choices for investing, but real estate investment is one of the popular choice for many investors. If you have enough savings and wondering which investment you should be start on, the answer is always real estate investment. Do you want to know why? Here are 5 reasons to tell you why we should invest in real estate instead of other kinds of investments.
➊ There are 2 sources of main income of real estate investment
In general, there are 2 sources of main income of real estate investment which are rental income and capital gains. If you invest in rental property, you will then get the rental income. If you buy, hold and sell, you will then the the capital gains and it depends on property price increment.
➋ You can get rich from real estate
Yes, this is definitely the first reason to convince you to start to invest in real estate. With real estate investment, people will get rich from capital gains. For instance, you invest in an apartment priced at RM 500k with a deposit of RM 50k. If you choose to rent it out, the monthly rents will be enough to pay the monthly loan installments, which means this property is financed by a bank installment monthly rent. Therefore, you will no need to pay anything except property maintenance and management fees.
After 20 years, you have probably paid-off the bank loan and this property have probably appreciated to RM 1M. In this case, if you sell out this property, you will get the profit of about RM 950k (RM 1M – RM 500k). If you had invested in 3 apartments and you will earn a nearly RM 3M in 20 years.
➌ You can control the value of property
If you have a property, you have full responsibility to find ways to increase the value of the property. There are many ways can increase the value of property, starting from basic renovation/ decoration like painting, flooring, kitchen & bathroom makeover and etc. It can help to increase the value of property or monthly rents. Some property investors will do small renovations to increase the property valuation, so they can sell it at higher price.
➍ The safest investment in long run
In general, every property need to take some time for its appreciation. Property prices are usually increase over years, and its not fluctuate so much (except commercial property), so that’s why property is the safest and wiser investment in long run. The longer you wait for the property appreciation, the higher profit you will earn. This is much more different from stock market where prices can change dramatically in a day and even minute.
➎ Relatively low risk
In general, real estate investing is not like investing in stock market where costs go down and up quite significantly in one day or even a minute. Only in certain situations where the economy was bad, real estate investment will be affected slightly.
Compared with other investment types such as opening a business, mutual fund, fixed deposit, or invested in stocks, real estate investment contains a lower risk than those investments. If we look at the risk compared with income potential, the property includes a relatively low risk with smart potential income from rents and capital gains.
Last but not least, although real estate investment require a lot of money to start with. Just like any other buying a house, need at least 10% of deposit of property selling price, stamp duty, legal fees, documentation fees, property maintenance and so on. But, it’s appreciation over time will definitely won’t let you down.
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