Real estate investing has always been seen as a good and secure business. It is true that this form of financial application has many advantages, but, like any other, involves some risks. Therefore, you need to know the real estate market well to properly employ the capital and have a good income. You can also consult with real estate investment experts to start. So, check out Experience Invest reviews.
How does real estate investing work?
We know that investment is the application of some kind of resource (money or property) with the prospect of a higher financial return than what was employed. There are fixed and variable applications. The former has its yield fixed at the time of purchase, or fluctuates according to a benchmark, such as the basic interest rate.
The second, as its name implies, refers to investments that do not have a determined but variable yield. In this case, profitability depends on future scenarios, such as the “behavior” of the national economy. In view of this instability, this type of application has higher yields.
We can conclude that in real estate investing there are characteristics of both fixed and variable income. For example, if, after purchasing a property, the owner decides to rent it, it will have the regularity of the payment and its annual correction by an indicator, usually the general market price index. These advantages are similar to fixed profit applications.
On the other hand, the appreciation of a house is not predictable, as it depends on many factors, including the interest rate, the liquidity and obsolescence of the property, and the aforementioned economic cycle. In this respect, real estate investment equals that of equities.
For those investors who do not have an equity that allows the purchase of a property, there is the alternative of acquiring shares of a real estate fund coming from a venture.