Updated: Mar 28, 2022
History has continuously shown us that real estate investing has been one of the most effective ways to earn a great return on investment and enhance wealth creation. If you observe the wealthiest in the world, you’ll see a commonality amongst them: property investing. The opportunities that the real estate market offers are almost infinite and property investors of all levels, be it beginner or astute, are able to reap tremendous rewards – provided they implement carefully strategized investment tactics. In this article, we’ll be looking at 9 real estate facts that are crucial to know.
Secure an early retirement through real estate investing
Choosing real estate as one of your investment paths can help you build a substantial nest egg in a reasonably short period of time. By purchasing property and renting it out, you can generate steady cash flow that will prove to be positive for your financial wellbeing for many years to come. But before embarking on this venture, plan to effectively manage your money and have a mindset of gradually building your rental property portfolio. Once you’re on the real estate ladder, plan strategically by putting your extra income towards your savings or other investment ventures so that you can secure that early retirement.
A low barrier of entry into the housing market
Contrary to popular belief, it’s interesting to note that you don’t need to invest enormously to start making money. One type of real estate that helps you pay over a period of time is buying off-plan property developments. You can put in as little as 10% of the total sum initially and then work your way towards paying installments over the period of construction. The earlier you start in the project, the better and more staged your payment plans will be. This method makes real estate much more flexible and accommodating to people who want to start off right away.
Your net worth will climb with property appreciation
Appreciation is one of the most crucial factors you need to consider for real estate investing. Without any direct intervention or involvement on your part, the property portfolio you hold will appreciate in value over time which means your net worth will exponentially grow rapidly over a period of time. You can expect an average appreciation rate of between 5% to 8% in most property markets. Real estate investments prove to be hassle free in comparison to other asset classes simply because you don’t need to constantly have direct input to make your money grow.
Property safeguards you against inflation
Having ownership of a rental property can be the perfect windbreaker against inflation. Unlike most assets, real estate doesn’t tend to wilt under inflation but on the contrary experiences a boom during those periods. When inflation increases, so does the value of your property as well as the rental income that it generates. Additionally, the appreciate rates tend to be higher than inflation rates so property investors are reassured of escaping price spikes irrespective of their strategy.
The real estate industry will continue to soar
All the indications are currently pointing at the market growing, irrespective of short and mid-term shocks. Because real estate is an asset that’s fairly low in volatility, real estate cycles are on an upward trend. There may be instances where the market gets hit a little bit with external factors such as recessions and pandemics. However, it’s worth to consider that a property based investment portfolio is not affected by every market dip. When it does get affected, it seems to make a rapid recovery proving to be one of the best asset classes for assurance and financial security.
You control your real estate
Unlike having an active role if you’re managing stocks and shares, real estate allows you the flexibility to earn passive income while tending to other commitments. Property investment also means you’re completely in charge throughout the process – from the investment strategy you wish to implement to the mortgage provider you think is best for you. You also have the benefit of screening tenants and chose the ones who fit your requirements.
There will always be opportunities to sell
During economic downturns and recessions, it’s not unheard of for companies to go bankrupt or default on debt, which can effectively erase your entire investment portfolio if it’s dealing with stocks and bonds. On the flip side, during a negative period you will still be able to sell your property even in the worst cases and this is an ideal way to mitigate any risks you could potentially face.
Property investment is a stable asset class
Depending on the investment strategy you choose for yourself, your real estate will be much less stressful than other investment classes. This is because the property market is much less volatile and more stable than other types of investing such as stocks, shares and more recently, cryptocurrencies. A property portfolio won’t always be affected by every market dip and is mostly insulated from any short term shocks. In addition to this, you have an option to hire a property management company to handle your rentals so that you don’t have to put in too much time or effort.
Market data analysis will be your go-to guide
Data is the most integral part of every real estate strategy and it will be one of the best tools to help you invest wisely. Analyzing supply and demand gaps as well as market trends is crucial to inform your decision making so be sure to carry out an in-depth market analysis. The Hass Index can be a great start for you to research on what’s happening in the Kenyan property market.
To sum up…
Real estate proves to be a lucrative sector, one that provides so many opportunities and very few hindrances. So if you’re considering taking a step towards property investing, take the time to understand and analyze every aspect of real estate so that you have a firm grasp. Once you’re there, get ready to start investing if that’s what your mind is calling for!