What Are The Pros And Cons Of Investing In Real Estate?

Real estate investing is an ideal option for investors seeking financial security and stability. Compared to other investment instruments, market fluctuations affect real estate investment less. It is considered a solid investment in the long term. Because real estate investments do not lose value easily.

Investments in residential or commercial property have the potential to gain steady value despite the changing conditions of the economy. Therefore, those who are looking for financial stability and security ask themselves “Does real estate investment make sense?” It is an investment tool that investors who ask the question frequently turn to.

Real estate investment is a concrete and tangible type of investment. This makes it different from other investment instruments. Indeed, the term “Real Estate” emphasizes this tangibility. Although the illiquidity of real estate investment is seen as a disadvantage by some, it is an important advantage.

Because intangible assets, such as stocks, can completely lose their value. A tangible real estate investment always represents value.

What Are The Advantages Of Real Estate Investment As a Wealth-Building Strategy?

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Real estate investments generally provide a long-term return. You can obtain a regular cash flow by generating rental or sales income. The property market is generally growing steadily, offering property investors the potential for long-term profits.

The property market almost always tends to appreciate. Real estate, especially in big cities, tends to maintain and increase its value due to increasing demand and limited supply. This offers the potential to increase the value of your investment in the long term.

By investing in property, you can earn a regular income stream through rentals. Rental income can help you get a return on your investment and cover the cost of maintaining your property. Real estate investors can benefit from certain tax advantages.

For example, a certain amount of investment income from houses offered to tenants to generate rental income may be exempt from tax. You can also deduct the expenses you incur on your property or agency expenses from your taxes.

How Can Individuals Start Investing In Real Estate, Even With Limited Capital?

Real estate investment has the potential to gain value in the long term. This is a significant advantage for investors. Factors such as population growth, economic growth, and urbanization contribute to the increase in real estate prices.

In particular, strategically chosen real estate in the right location gains value over time. This increase provides a significant profit to the investor. Real estate in big cities increases their value with environmental developments and urbanization.

Research the area thoroughly to find out if there are any negative situations specific to the location of the house. Do detailed research for the current price. Earthquakes, war, epidemics, etc. Unless such situations occur, your real estate investment will gain value.

However, if these extreme situations occur, the value of all investment instruments will decrease or disappear. In such cases, having tangible assets again becomes important.

What Are The Risks And Challenges Of Real Estate Investing To Be Aware Of?

Like every investment, real estate investment has some risks. Factors such as real estate market fluctuations, finding a tenant, or the property remaining vacant represent potential risks. Additionally, real estate investing normally has low liquidity, meaning it may be difficult to turn your investment into cash quickly. 

However, with our years of real estate investment consultancy experience, we also minimize the disadvantages of real estate investment. Real estate consultancy companies do detailed financial background checks on candidates when their house is being rented and see if they have missed a single electricity bill payment before.

 A rental fee sufficient to cover the entire lease term is obtained from potentially risky tenants before key delivery. If the tenant wants to leave the house unexpectedly, the tenant either gives at least 2 months’ notice or 2 months’ rent is collected from the tenant.

As the real estate market is one of the fastest and most active in the world, most homes receive their first offer within 6 to 24 hours. Although it is a near impossible scenario for houses to remain vacant, finding the right candidates is very important and eliminates most of the risks of real estate investment.

Can You Share Success Stories Of Real Estate Investors Who Achieved Financial Freedom?

real estate investment

The investor has the opportunity to examine the property before purchasing. Additionally, after purchase, all control passes to the investor. This means he can determine every detail, from financing to rent, necessary repairs, and the timing of the sale.

On the other hand, with assets such as stocks, you are bound by the decisions of the investee company. This causes control to move away from the investor. Therefore, when investing in real estate, long-term security and controllability of the investment comes to the fore.

Donald Trump, one of the most popular presidents of the United States, can be given as an example of one of the most famous real estate tycoons in the world. ​​On the other hand, Li Ka-Shing, one of the richest businessmen in the world, is one of the first examples that comes to mind as a real estate tycoon.

How Does Real Estate Diversify Investment Portfolios And Generate Passive Income?

Real estate investing is unique in creating a stable and ongoing source of passive income. Owning rental real estate allows you to earn regular rental income. This means that investors earn regular income by renting their properties for the short, medium, or long term.

In this process, while the value of the real estate increases, the investor earns passive income without actively working. Particularly in Turkey, with increasing urbanization rates and increasing demand for rental properties, investing in real estate has the potential to provide a permanent source of income.

Real estate investment provides effective protection against the economic uncertainties created by inflation. Historically, rent increase rates have generally increased in line with inflation.

This offers three key advantages for real estate investors:

  • First, as inflation increases, investors can increase their rental income accordingly.
  • Second, the market value of rental properties will increase at the rate of inflation.
  • Third, and perhaps most importantly, loan repayments are independent of the impact of inflation. Therefore, as inflation increases, its real cost decreases.

These features are among the factors that make real estate investment particularly attractive for investors in the modern world. Real estate investments play an important role in protecting the purchasing power of investors by acting as a bulwark against inflation.

Therefore, “Is it profitable to invest in real estate?” We can say yes to the question due to its protection against inflation.

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