Investing in real estate can give you financial freedom. However, this isn’t as easy to get unlike investing in stocks or bonds, but it is as lucrative as long as you are aware of its advantages and disadvantages.
Capital Gains and Passive Income
Earning money in real estate comes in two forms: capital gains and passive income.
Capital gains involve buying low and selling high. This often happens when you are able to purchase a dilapidated structure at a price substantially lower than the market value and sell it at a higher price. In general, you need to renovate the property into a sellable state to realise this profit.
Passive income involves buying property then renting or leasing it to tenants. Ideally, rental income will either match or exceed any of the expenses related to property ownership, such as taxes, maintenance, and mortgages.
You can also combine these methods by leasing a property you intend to sell while you wait for a buyer. Sometimes you can get lucky in that your tenant will like your property enough to offer to buy it.
Managing Your Property
Real estate investing can take a lot of capital. In general, you’ll need thousands of dollars for the down payment and more to renovate. Real estate investments are also time and management intensive. Starting with one or two properties in your area can be easy to manage, but adding more means either focusing on your investments or hiring a property manager.
Keep what’s in store for the future in mind when buying real estate. If you have properties in Townsville, make sure you speak to your lawyer about conveyancing. This way, should anything happen to you, title transfers to your heirs will not be an issue.
If you are new to real estate investing, do your research. See which real estate investment type is more comfortable for you. Remember that all investments involve some risk, but by studying the ins and outs of property investment, you can minimise risks and be on your way to your financial goals.