Real estate investment has always had its place among various investment products. In recent years, it has come to the forefront and attracted the interest of the public, mainly due to the significant reduction of interest rates not only on mortgages and loans but also on savings products.

So, real estate investment trusts stocks property can bring you a much better rate of return than a savings account, time deposits, or building savings.

Real estate can protect the value of money against inflation for decades, it provides a home, and you can even get interesting value for your money. Although not every investment ends in success, real estate investments are considered among the safest options.

However, Gainy mentioned, it should be noted that it is not an easy way to invest. To maximize your chances of making the most profitable investment, you need the proper knowledge.

In this article, among other things, we will look at why to invest in real estate, how to choose a suitable property (choice of location, accommodation, etc.), what to look for, how to determine the right time to buy a property, and also show other indirect forms of real estate investment.

Without knowledge, it is impossible. Definitely not in real estate investment. That is why we have prepared this comprehensive article for you, which contains a lot of necessary information. Are you serious about investing in real estate? If yes, then you certainly should not miss this article.

How to invest in physical real estate? Why should you be interested in real estate?

Investing in physical real estate is considered an appropriate asset investment during periods of low-interest rates due to its stability. Rising interest rates, rents, and wages increase real estate prices (except for short-term dips).

Now let’s take a closer look at the main aspects of this investment, be it the pros or cons.

Why should you be interested in investing in real estate?

1. You can achieve a double appreciation

• One option is to live in the property, save on rent and protect the invested money from inflation (but it is not really an investment).

• The second is to buy, for example, an investment apartment, which you will rent out. Its price will increase over time, and you will also regularly receive additional income. Thus, you can double your investment. And it is this option that we will now focus on in the article.

2. The real estate market is one of the most stable

Along with, for example, investments in gold, real estate is considered one of the safest and most stable. Their fall is insignificant even during crises if they fall at all. Often the price growth is only slowed down, but the price does not fall at all.

After all, housing is a basic human need, regardless of what is happening in the market.

3. If you need money, you can sell the property

Real estate is not quite a liquid investment, but the possibility of its sale is still there, and sometimes it goes quite quickly. Conversely, in the case of bonds, there is typically no possibility of early termination. For example, if you decide to travel in retirement, just sell the property and go on a long vacation.

Why investing in real estate is wise – What to watch out for?

As you can imagine, investing in real estate is not easy. Everything needs to be very well and carefully calculated to make the investment profitable. So that nothing serious surprises you, let’s look at a few factors that fundamentally complicate real estate investment.

Tenant

The tenant brings great difficulties. You need to find someone reliable, and paid, they can not demolish your apartment, they must have disciplined pets, and they must get along well with the neighbors.

• Some tenants owe their landlords several installments, and sometimes it is very difficult to get an unreliable tenant out of the apartment. Again, it may take time to find someone else, etc. which can put the whole investment in the red.

• To feel more confident in theoretical calculations and estimates, count on at least one free month per calendar year. But it may happen that you can not find a tenant in your apartment for numerous months, which can be quite expensive.

• Also, keep in mind that a bad tenant can turn your investment into a nightmare

Responsibilities of the landlord

Do not forget that regardless of whether your apartment is lived in or not, you still have to pay a number of expenses.

TIP

Some problems can be solved by renting through an agency (e.g., finding a tenant, signing contracts, collecting rent, etc.), but this again means additional costs. However, giving up part of the profit can save a lot of time and turn the rent into passive income.

What will be the other expenses?

Every month, you contribute to a repair fund (usually paid by the tenant). You also pay the real estate tax (and in the case of renting also the rent tax). You will have to pay a fee to the cadastral office and fees related to the mortgage. Most first-time investors will probably need the help of professional advisors or accountants, which will mean additional time and expense.

• In addition, most landlords pay for the property and household insurance. Of course, it is not superfluous to set aside money for possible repairs or renovations (unexpected expenses).

Indirect real estate investments – Funds, bonds, crowdfunding

In addition to purchasing physical real estate, there are a number of others, often much simpler, real estate investments. These alternative forms of investment typically require significantly lower initial capital and are therefore more accessible to a wider range of users (small investors).

1. Investing in a real estate fund

The big advantage of real estate funds is relatively stable development over time, collateralized property (not always), and the fact that it is most typically rented to companies.

2. Real estate bonds

The big advantage of this is a fixed interest rate. It is paid monthly, quarterly, or annually.

The disadvantage is the fixed maturity, which cannot be changed during the course.

3. Crowdfunding

The advantage is that these are relatively quick and easy ways to earn money (with well-chosen investments) and you will not need as much capital as to buy an entire property. Another aspect is diversification, on P2P platforms you can spread your investment across several projects. But it is still diversified in only one sector.