The pros and cons of real estate investment

By | September 30, 2019

Most investors are familiar with investing in real estate than they know about ways to invest in the equity market. A real estate investment is preferred because it is tangible, and you can touch and feel it as well as live in it. Frauds with real estate investments are rare, and the leverage that you get when you invest in the real estate market is considered to be safer than the leverage that you get when you invest in stocks. Real estate has also served as a hedge against inflation.

The problem with Texas real estate investment, is that you need to do much more work than you would have to do if you were investing in stocks. If your property does not get a tenant, then you will be paying extra out of your pocket every month. The thing that most of them fail to realize is that the appreciation in real estate is not much when compared with the inflation rate.

Stocks or real estate – The debate goes on!

The lower and the middle-class people consider real estate investment to be better because that is what they have been trained to believe. On the other hand, the upper-class crowd would bet on the benefits of investing in stocks and bonds over real estate investments. The middle-class group has always heard about their past generations owing homes, and this is what makes them believe that they should make similar investments.

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Texas real estate investment connects with psychological reasons as people feel that these are not held electronically like stocks. They like their real estate investment because they can see it. Most of the retail investors invest in a stock just by reading the company and auditor reports. Thus they feel dependent on someone else to understand their investment. Such investors like the real estate investment because they have done the homework of selecting and purchasing the property, and they are also responsible for maintaining it.

On the flip side if you invest in real estate, then you have to make sure that everything is working right. The maintenance of the property is totally on you. So in case, the sewage explodes in the middle of the night, or there is a gas leak then there are chances that you may get sued. Even if you hire someone to manage your property on your behalf, you need to take out time to meet the manager and this leads to additional expense.

The real estate investment costs you taxes, insurance, utilities, and much more, and this is over and above the EMI that you pay to own the home. If your home is vacant, then the monthly expenses will outweigh the profits that you may be earning from the property investment.

To sum it up

The actual property value hardly increases if adjusted for inflation. To invest or to not invest in real estate is again a personal preference. Investing in real estate is also something that needs due diligence. You need to research a lot and do your homework to finally decide on a property that you believe will give you good returns in the future.