There are several reserves available in the market for all kinds of sectors. But, investing in a real estate market needs an accurate plan with prevailing methods of execution. One must have the best of both worlds that are, facts and capital that is required for purchase or investment. Most people spend in this market to receive hefty profits, while some of them invest to generate a passive revenue source. Investment in real estate has its peculiar flaws and strengths. Hence, it is highly essential to get them right.
Here are some points you may consider if you are thinking of making an investment in real estate –
Stating Below Are Some Pros Of Investing In Real Estate
1. Easy To Understand
While speaking of dealing or investing in properties, information that people conceive is almost equal on a primary level. You need to dig in deep to be proficient in this market, which requires a lot of study and hands-on research. Though as simple as it sounds and as complex as it can be – investing in real estate is less complicated as it involves purchasing the property and selling it (if the investor wants to do a house flipping).
If you are investing in funds, you must know the number game really well, if you are into trading bonds the principle halts the same. Investments could be of any kind but, in every way, you would require fundamental math skills that help you in understanding the notion well and painstakingly.
2. Always Has An Improvable Side
Several other investments could bind you to certain limitations which you might certainly control whereas, real estate investments are more pliable and improvable. As being one of the tangible assets, it is evident to increase a property’s worth in all degrees, by using some ‘elbow grease and ‘sweat equity.’ It does not matter how the process of upkeep is – it could be structural or just maintenance of the assets.
The above reason makes investments in real estate improvable. If you are confused about the methods of investing in it, and you are residing in New York City, you can get in touch with ‘Elite Properties‘ they buy a house in an all-cash offer and bid the best deal every time.
3. Shield Against Inflation
The yields on real estate are allied to the rents, received from the tenants. Real estate has the head to strike inflation extra consistently than any other reserves, as it reacts in respect of it. It proves to be a good hedge against inflation, as rental properties are released every year (every 11 months), and rents are attuned upwards in the inflationary periods. Therefore, you are less worried as an investor in concern to the profits on the property.
4. Offers Security
Investing in land and assets like property always proves to be a gravy train in the scenario, which also provides you with a sense of security and bequeaths a legacy of your name. Also, investing in other possessions like gold or platinum might leave you bound by stress whereas, a property can’t be theft, so you have a sigh of relief, leading you to a much more peaceful future.
Hence, adding an extra asset to your prized possession list never does any harm, but on the other hand, it is profoundly important for the investor to research precisely.
5. Dual Income Source
Another added benefit of investing in a property is that you can receive profit every day, but how? Rental income – One of the good things about rental income is that you can earn profits out of it every day for a full year or as many years as you want, it also acts as a bonus if you have a full-time serving job as the rent supplements the income. While dividend stock yields won’t assure you big returns.
Investing in real estate aid in mounting equity as the flow of income is regular. You don’t have to pay extra charges for the upkeep of the property.
6. House Flipping
House Flipping is where you buy a property, rehabilitate it, and sell it to potential buyers. It helps you to ultimately attain a big profit edge on the amount you invested while buying. Buying a home, fixing it, and selling it could be too much. But, it could also help you receive big profits as the property you buy does not necessarily contain structural damage every time.
A smart investor will buy a house and do the cosmetic changes, repairs, and staging (if needed) to increase its worth in the market.
Don’t Oversee this while buying a property for a House Flipping..
There are also some points you can’t oversee while buying a property for house flipping –
- Understand, what kind of house or property you wish to buy
- Neighborhood / Locality plays an essential role
- The property should be handsome and could curb appeal
- It should have the least amount of fixations required
- It does not contain any mortgage left or unpaid
Always keep in mind that you are not the homeowner but an investor. No investor will spend on an ugly house for cash.
Stating Below Are Some Cons Of Investing In Real Estate –
1. Greater Transaction Costs
When we compare buying or investing in property with stocks, there is a high chance of property winning the comparison. The size of the property including the category decides the listing price. Whereas, the amount on stocks will fluctuate for a shorter term (inclusive of the transaction cost) and promise you measurable gains.
The transaction cost of real estate is comparatively high, which transpires due to opacity in the market. Therefore, investing in the real estate market can significantly affect the value of the investment made. Ultimately making it more difficult to earn profits, as it is also tangible and requires ongoing maintenance for sustenance.
The first question appearing in your mind would be, what is illiquidity? As mentioned above, real estate is a big market and a preferable option for investment to many. But, it also has some setbacks, and one of them is illiquidity. Trades in the market can be pretty tough as you tend to get fastened with a big price on the property.
Here, the amount invested in the property is returned, with a substantial loss of capital. Such occurrences happen due to the massive gap in the bidding price. This price is provided by the buyer and the investment price is set by the investor or seller. It is often tough to meet the price of the seller which eventually leads them to back out from the offer.
3. Requires Management and Maintenance
If you want to invest in real estate markets, make sure you balance the books well. As soon as you make an investment in a property, your expenditure increases inevitably. It requires maintenance and other foundations for the upkeep and improvements, for any glitches in the property. Investing in properties is like a progressive ladder of ever-increasing expenses if the house sits vacant for a prolonged duration.
Investing in a property requires an ample amount of capital, for legal and structural improvements. Charges like financing payments and taxes add to the increasing cost that also consists of maintenance fees.
4. Clutches Significant Inefficiencies
Including all the above disadvantages real estate also clutches inefficiencies, why? As the investor and buyer both mutually decide the value of the property. Here, the investors would face an unseen dilemma of not knowing the property’s actual worth.
It is essential to not go with the flow and check everything before proceeding. As the amount of information perceived is solely based on clauses given before signing the deal.
Most investors agree to the listed price and make an offer without carrying out a hands-on inspection of the property. For example – An investor purchases a property worth $10,000 and its actual worth could be $10,500 (this could be the best scenario). But, if you purchase a property as same for $10,000 whereas the price of the property is $7,500 then, this is a blunder and a significant loss. Therefore it is highly advisable to carry out an inspection before you make an offer. You must visit the site to avoid a huge mistake in the coming time.
5. Creates Liabilities
Being the owner of a property laterally brings a lot of liabilities on your shoulder. And legal issues come into play. As you own a property you are legally responsible for the damages. For instance, if the fence falls off on someone and the person is injured, you are accountable for the medical care of that person. You may also face personal injury litigation and attorney fees.
All investments have their own set of pros and cons. One must know the ropes while diving in the ocean of real estate. A wise investor will make most of both pros and cons to employ maximum profit out of the investment. Moreover, you can contact reputed real estate companies in NY like ‘Elite Properties’ to help you in understanding – buying – selling of properties in NYC.
As we have taken a step in 2019, there are a bunch of questions that jump in every individual’s mind. Similarly applied to the real estate sector as well, do we see innovative opportunities coming in the market or it will be a downfall in the economy? As 2018 was a year full of developments and technologies, let us have a look at some real estate forecasts and predictions for the year 2019.
The real estate market is broad and demanding, and it becomes difficult for the Government to meet the requirements of the civilians. As there is a massive rise in the allowance of building permits, it is highly possible for us to see new constructions gaining numbers in a majority.
A study from the experts reveals, that the percentage of single-family permits issued nationwide has progressed by 8.4% compared to the year 2017 till 2018. The housing market is a gradually retrieving, and the process of filing of permits till receiving the end product consumes time, the market will eventually go through the lack of supplies leading to less listed homes.
New Technology Usage
Use of technology entices buyers. How does this work? Things like virtual staging, walkthroughs, and adoption of VR headsets – where people soak in the 3D visualization and experience of being in their dream home, capturing top shots of the property and landscape through drones – provides a 360-degree view and easy listing on MLS, using Chabot’s on websites and web applications for real estate which aids in saving money and time.
Added to these there is also a trend of Blockchain (is a stage where transactions or trades are carried, through digital currencies) which is growing immensely all over the globe, where people trade in Bitcoins and Ethereum (these are types of Cryptocurrencies that are operated on Blockchain). This platform is beneficial in many conducts as it offers smooth and transparent transactions and trades across the world digitally which involves less leg and paperwork. Here, you ultimately exempt the mediator and close deals directly with the third party.
Prefabricated Homes is the Future
Let us explain to you what are prefabricated homes in the first place – prefabricated houses resemble a 3D jigsaw puzzle, they are manufactured in parts offsite and then assembled onsite on the preferred location. Prefabrication is a construction technique which is fast and cost-effective compared to various other construction methods. Prefabricated homes are designed employing durable materials, offering high performance in concerns with the sustainability.
Facilitated entirely with amenities and luxuries prefabricated homes are a great choice to dwell for shorter terms.
Millennials, Above All the Generations
If your question is, which category of generation is flourishing as new buyers or investors in the real estate sector? The answer would be millennials. The millennials are currently the largest generation on the bar which has the maximum number of first-time home buyers in the real estate industry, calculated to be around 66%.
Millennials are smarter and much knowledgeable in comparison to the baby-boomers and Gen Xers when it comes to the home buying process. With the help of available technologies, IoT and apps millennials examine thoroughly to keep things streamlined before taking any step that might take them down in the pit of loss.
Substantial Increase in Mortgage Rates
A report from Mortgage Bankers Association states that the mortgage rates are currently around 4.9% (that is in the year 2018) and would stay the same in 2019 as well. The above-mentioned studies are based on the 30-year mortgage rates, as the rates would remain the same for a leading half of the year, they might also tend to jump thereby increasing from the current 4.9% to 5.1% as the year ends. According to the real estate market, it is a healthy growth but, as far as the buyer’s market is concerned, it would be an evident downfall.
According to a real estate forecast that was issued for the year 2018 (July) stated, the prices will continue to rise for the year 2019. As the past year experienced a rise of 8.1%, the experts foretold the rise will progress by 6.5% by the time summer arrives for the year 2019.
Sellers Over Buyers
As mentioned above, the increase in mortgage rates and a shortage of inventory recorded in the year 2017-2018 will generate a deficiency in the housing markets. All of the above will create an irregularity in trade, supply, and inversion of investing in real estate. Hence, the prices of properties will rise in 2019 affecting the affordability of buying homes.
In contrary, it is also a golden opportunity for those who are looking for an investment as there are many properties listed on the bar, you get hands on your dream property, which would eventually make you a smart buyer in the seller’s market. But the final word, 2019 is going to be a seller’s market and a gold mine for the ones who are listing their property.
Decide For Yourself
Addressed above were some real estate trends and real estate forecasts in 2019 that we might get to witness. The real estate market is very fragile and has a drift to fluctuate we will advise you to choose your purchases carefully, and not fall in the pothole of errors.
Else, if wish to buy or sell house in NY, you can reach a reliable real estate company like ‘Elite Properties‘ who will be happy to help you and sort your queries for the housing market.