Real estate is a profitable long term investment that also gives you constant and steady cash flow when you invest in rental property. This however doesn’t mean that it doesn’t come with any downsides or disadvantages. The downsides are a few and when done right real estate investment is among the best if not the very best investment option that you can take. Here are some of the major downsides to a real estate investment.
High investment costs – to be able to invest in real estate you need to have quite a large sum of money or have a good credit score to be able to get the mortgage from the bank. This is actually the biggest reason why many investors interested in real estate investment are not able launch their careers.
Regular expenses – to keep your rental income appealing to the customers, regular maintenance is required. Maintenance cost can be high depending on what needs to be changed or repaired and this eats into your profit and cash flow.
Low Liquidity – it takes time to sell a property or land to get the money you need as compared to other investment options like stocks that you can buy and sell in a matter of minutes. Real estate requires you to be patient when you need to liquidate your assets. However when you liquidate you can always be sure that you will get a good amount of money and also a huge profit since real estate appreciates.
Management – when you have a real estate property you need a team to manage things for you. There is a lot that needs to be done from filing real estate taxes, maintenance of the property, insurance and so much more. Getting help from a team of accountants, appraisers, clerks, agents and so many other people will ensure that things run smoothly and that you do not overwork yourself. This however also means you will be spending more eating on your profits.
It might take time to recover from a deal gone bad – investing in real estate means that you are putting down quite a large sum of money down to acquire the property whether it is land or a rental property. Sometimes there are many inefficiencies during this buying period that might push you to make a bad decision when purchasing property only to learn later on that the property will need extra work to become what you expected it to be. Recovering from a bad deal can take you a very long time a matter of even decades to recover your money.
To be a successful real estate investor you have to be able to leverage these disadvantages of real estate investment and the advantages alike to have the upper hand Mortgage brokers Vancouver