It is tough economic times for a lot of people right now, and so investing money or choosing the right investments can be a real difficult decision. Having a plan for your money and your future is critical.

Some people do not have a lot of faith in the equity markets right now so an alternative is to  invest in real estate which can be one of the fastest ways to build wealth. Real estate investing has created more millionaires than any other form of investing because of its many advantages. In the long run – the largest asset most people ever have is the equity in their own home.

house and moneyWhether you invest for cash flow or capital gains, your success is dependent on your education. Robert Kiyosaki of ‘Rich Dad Poor Dad’ says, “Investing is only risky if you don’t know what you’re doing. The rich know the many advantages that investing in real estate offers and how they can benefit from them.”

Here are some advantages; it can give you income for the rest of your life. If you buy properties and rent the properties out it can give you lifelong income; and you can use a lot of leverage to acquire them without using your own money.

One disadvantage is if you buy a property and can’t make the mortgage payments you can lose the property and damage your credit; if the people you are renting out to do not pay their rent you will have to use their security money and find new people quickly or it can eat up your profits. It generally is a non-liquid investment that requires looking after and don’t forget the taxes to be paid.

An ideal investment portfolio would have some liquid assets that can be quickly converted to cash in order to weather real estate investments when their returns are not enough to pay periodic costs.

Although real estate has generally been a good investment over time, there is no guarantee that investors will make money. This has been proven by the mortgage crisis in the USA in 2008-09, home values can decline very quickly.

When you invest in real estate, it can be a great way to build your wealth and get some extra income. It should be something to take into consideration when planning your future, definitely starting with owning your own home.

My advice is – get advice. Do your homework, talk to Financial Advisors and Realtors and people that you know that have or are investing in real estate. The best advice comes from someone who has had experience.

Shari Molchan

 

 


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