Author: Ani Kakuria

Typing ‘invest in real estate’ into the Google search engine returns approximately 2,330,000,000 results in 0.67 seconds.

This is not surprising, considering what is happening in the world today. As economic trends change in the blink of an eye, it becomes even riskier to choose traditional investment methods. For example, while shares and bonds produce average profits of at least 5-7%, investors are unable to control what happens on the stock exchange.

However, it is also possible to conduct so-called passive investment in real estate. This is regarded as a more stable source of income, as it is easier to manage.

Let us take a closer look at the pros and cons of passive long-term investment in real estate.

Whichever method of investing in real estate we choose, be it buying, selling or rental, it always involves obtaining value for money. That is why real estate ownership creates a sense of security. As time goes by, the value of a property goes up. While there are no guarantees that the value will increase indefinitely, real estate investment always creates a constant stream of income, which creates financial security.

Another advantage of investing in real estate low taxes (5%) on letting property.

This is one of the main reasons why people choose this investment method.

It is also important to note that unlike other forms of investment, real estate can become an insurance against inflation. It is one of the few asset types that proportionally responds to inflation, i.e. the sale and rental price of a property increases in line with the inflation rate.

The bottom line is that whichever way we look at it, investment in real estate is always beneficial. At the very least, you will always have a place where you can escape from the daily routine.

The positives are evident, but what about disadvantages? What should we take into account before investing in real estate?

First of all, it is important to understand that this type of investment requires a substantial seed capital – buying an investment property is not cheap. It is therefore necessary to have cash or to secure a substantial mortgage loan. 

Moreover, buying, selling and letting real estate is can be a lengthy process that requires a lot of effort. You can entrust these tasks to a specialised company, but this creates additional costs. Further expenses are required for property maintenance and upkeep, be it renovation, equipment upgrade, cleaning, or similar.

Most importantly, one must keep in mind that profit from real estate investment depends on the specific market where the property is located. Carelessness in choosing and purchasing a property can lead to significant losses. It is therefore necessary to conduct a lot of research and obtain practical knowledge to be able to choose the right property in the right location.

Based on the above, we believe that in spite of the disadvantages, real estate is something that cannot be lost or stolen. Therefore, if chosen wisely, it constitutes the most secure form of investment. In the words of the Canadian businessman Harv Eker, “don’t wait to buy real estate – buy real estate and wait.”