Investing is always an exciting time for anyone, especially when you’re looking as to where you want to invest your hard-earned money. Whilst all investments have an element of risk, we want to tell you why investing in real estate is always a good idea.
Real Estate appreciates in value
Real Estate has historically always been a highly appreciating asset. Whilst there may have been dips in real estate valuation, sporadically over the last 100 years, the overall market shows one of continuous appreciation.
A significant aspect to real estate appreciation is that, not only does the building or home have an appreciation but the land that the building is on also appreciates in value over time. In some real estate markets, the land can be valued more than the building standing on it.
Real Estate is a tangible asset
Unlike investments in the stock market or cryptocurrency, real estate investments are tangible, physical assets. So just like cars, computers or other physical assets, at the very least there is a monetary value in the physical asset.
Whereas investments made in the stock market, if the company declares bankruptcy or the market crashes, you can see your investment of €500 Euros go from 500 to 50 or even 0 instantly.
Diversify your investment portfolio
When it comes to investments, experts recommend that diversification can be a key factor in the success of your investment portfolio. As such, real estate with such a low risk profile in comparison to other investments, is a great way for you to invest and diversify your portfolio. This way should any of your other investment strategies run their life cycle, your diversification in real-estate helps the overall success of your portfolio.
You can predict the cash flow of real estate investments
Most investments don’t allow you to accurately predict your cashflow ahead of time as you are normally required to either sell the asset or receive some form of dividend payment to receive some sort of income. Real estate however gives you a unique opportunity. If your property is on a long-term lease and remains rented, then you can predict, to a high certainty, future cashflow of the property on a monthly basis. Something which isn’t possible with common stock market investments.
Tax Deductions
Real-estate investments offer the benefit of several tax deductions or no tax paid depending on the reason for purchasing the property. Cyprus enjoys a lack of Capital Gains tax for properties bought for personal use and there is also no inheritance tax should you want to pass on the property to your children. There are also several further tax deductibles you can receive on your investment’s depending on your portfolio, something that can reasonably be calculated ahead of time depending on the country and size of investment.
The opportunity to maximize value is in your hands
Real estate offers you the opportunity to add further value to your investment and improve it should you see fit, thus improving the income return you receive from it. Adding extra amenities such as a new kitchen or refurbishing the bedrooms means you can either rent or sell your investment at a higher rate.
Some of the biggest improvements you can make to a property is to add luxury items to it such as adding a pool, a home gym or even a deck addition. Whilst being a significant investment at first, the return overall is quite significant as properties that have these amenities can charge a premium.
A Hedge Against Inflation
Whilst most assets you might own such as stock might rise or fall against the volatility of the market, real estate is a secure hedge against inflation. For rental properties, rental prices average an increase between 2-3% to match inflation, and property values themselves increase through appreciation. So as monthly income through rent rises, so does the base value of the property increase, allowing you to hedge against rising inflation.
Multiple Investment Options
Real estate offers endless investment options for individuals to choose from, according to their needs.
Own instead of rent
Buying your own home also counts as an investment, as you are no longer paying rent for an asset that you will ultimately have to leave. By mortgaging a property, you have ultimately taken the first step of adding to your real estate portfolio with your first property. Once that property’s mortgage is paid off what remains is a wholly owned asset of yours.
Attractive purchasing schemes
Banks have now made it easier for you to purchase your first home or any immovable property by offering attractive schemes with low interest rates, especially if this is your first home and a low repayment amount monthly. Depending on your needs, the banks are able to customize loan structures depending on your budget and financial spending power.