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Investing is a trendy topic all around the world with so many different possibilities that a beginner can easily get lost in them. A carefully selected real estate investment could be one of the ways to begin your investing career, as real estate is considered a relatively stable investment. Real estate is also not prone to passing trends – an app or a start-up could flare up into the sky yet crash in just a couple of years, while good quality rental apartments are always needed.
Up until a few years ago, a real estate investment for the average Joe meant taking out a bank loan and buying a home. Today however, crowdfunding has made this type of asset affordable to basically anybody who has the ability to save 100 euros a month. Next we bring to you a few aspects of why one should consider investing into real estate from the perspective of both, purchasing and crowdfunding real estate.
1. Stable earnings
As previously mentioned, there is a market for rental accommodation even during times when an economy is not necessarily growing, because no matter what, people need a roof over their heads. Thus, with correctly selected real estate it means it is reasonable for one to expect a stable rental revenue stream.
2. Increase in value
As the economy grows, cost of living rises, or the real estate market changes, so do rental prices, enabling the owner to increase the rent periodically. Usually sales prices of apartments also correlate with economic trends, adding to the potential profit from your real estate.
It is also possible to raise the rent when there is economic progress, the cost of living rises, or the real estate market changes. In addition to this, the sale value of real estate rises and this even further increases the chance of profiting from your real estate.
3. Protection against inflation
Unlike many other fields, the change in the value of real estate in the longer term is comparable to inflation – as inflation increases, as a rule, the value of real estate also increases. This makes investing in real estate very reasonable in the longer term.
As the economic growth slows down or the economy goes into recession, you will still have your real estate. People know how to appreciate a real and tangible value which they can easily understand. This is one of the reasons that more and more people are considering investing in real estate as their first step to becoming an investor.
5. Small fluctuation in value
While price fluctuations are a normal part of the stock exchange, real estate is not prone to short-term price fluctuations and usually holds its value quite well. Of course, there are price fluctuations over the years, but unless something very rare happens, you will not wake up one morning with your apartment’s value having decreased significantly overnight. And potential damage to a rental apartment can be compensated by a good insurance contract.
6. Price flexibility
After finding a suitable object for a real estate investment, it is quite common to negotiate on the price to minimize the cost and maximize the gains as the price of the is not necessarily set in stone.
7. It’s easy to make a real estate investment
While purchasing real estate traditionally means paying a large lump sum of money, crowdfunding is changing that. Although it is important to note that with crowdfunding, making a real estate investment is a bit different because the investor is not purchasing an apartment but is rather funding a real estate development project. This way investors have an easy way to invest their money in the shorter term into a development, earning revenue when the development is completed and all units from it are sold.
Crowdfunding does not require large amounts to start so it enables anyone to make a real estate investment without needing vast amounts of knowledge or funds.