In every trading market, there is a time when the sellers are doing well and a good time for the buyers. However, things aren’t as simple when it comes to the real estate market.
When the prices are in the favor of the buyers, the interest rates might be higher. On the other hand, the interest rates might be favorable when real estate prices are higher and in the favor of the sellers.
That’s why you should dive into real estate without thinking too much about the situation of the market compared to the interest rates. But, you should always pick a location with potential.
But, why should you put your money into real estate? Here are some reasons why.
Long Term Investment
If you’re looking for a good long-term investment, then real estate is definitely among the best options. With long-term investments, you need to consider the impact of inflation along with your profits.
For instance, you’re getting a return of 5% annually from an investment but the annual inflation rate is 6%. That means you would be losing money every year rather than making a profit.
With a good real estate option, you can stay ahead of inflation for a long time and build equity. Unlike other long-term investments, like buying shares, you can have control over your asset as well.
Passive Income Opportunity
Other than being a great long-term opportunity, real estate can also make you money in the short term. People have different reasons for investing in real estate.
Some buy vacation homes, maintain them, use them a couple of months a year, and watch them appreciate. On the other hand, some investors buy property for short-term or long-term rental.
If you are in the latter, you can earn money while you’re building equity and staying ahead of inflation. This way, you can look after your short-term and long-term needs.
Plenty of Options
When the term “real estate” is used, many people instantly think of a regular house or an apartment if they live in the city. However, real estate covers quite a range of options in reality. When you invest in real estate, you can look into:
- Single-family homes
- Multifamily homes
- Vacations homes
- Beach houses
The list keeps going on and on. Another popular method is to buy distressed properties, fix them up, and sell or rent them for an attractive price. With this incredible range, you can easily find something that suits your needs with the right DSCR home loan.
Easy To Create Leverage
Speaking of loans, you can use them to create leverage.
Leverage, in this context, is when you use little of your money and more of someone else’s money to fund your purchase. When you’re buying real estate, you can put down 20%, for example, and find a lender to find the rest of the purchase.
If you rent the property after buying it, then you can pay back the lender from the rent. This way, the investment will pay the rest of the amount by itself.