Investing In Real Estate

Other than the stock market, investing in real estate has always been a great avenue or an alternative way to make money. Whether it is via your principal residence or through the purchase of investment property such a house, building, or multi-dweller residence, opportunities to invest in real estate will occur through time. You just need to be aware of this possibility.

The best thing about investing in real estate is the leverage impact of the initial investment, which is why real estate can be such a good investment. For example, say you put 10% down and bought a $500,000 house following the real estate market collapse in 2008. The real estate sector has been rallying higher since and has resulted in massive gains in real estate prices. Now say the house is now valued at $800,000. This means your initial $50,000 down payment generated $300,000 in profits, representing a profit margin of six times the initial payment.

The aforementioned example clearly shows the significant advantage of buying real estate due to the leverage. Imagine buying multiple properties and watching prices rise. Of course in a rising real estate market, you will see speculators who buy and subsequently sell the property for a gain. At this time, the real estate is showing some resistance. Investors should look for weakness in real estate as a potential entry point to buy real estate. They can also consider buying real estate via the stock market through real estate stocks or exchange-traded funds.


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