Real estate investment can be a great way to build up your financial future. Real estate regularly shows upwards growth, and has proven to be an attractive channel for investors. It carries some risk, which can be managed with the right strategy and investment approach. Many people will shy away from real estate investment or make poor strategic choices that hinder their success. If you are considering real estate as an investment opportunity, here are some misconceptions that should not shape your approach.
Real estate investment is all about property
You do not have to be a landlord to benefit from real estate. There are many opportunities for real estate investment that carry lower risk and place fewer demands on the investor. Hard money loans, an option for the wealthier investor, could be a great way to invest in real estate with minimal risk. Like real estate ETFs and mutual funds, hard money loans allow for investment in real estate via proxy. There are also real estate investment companies that trade shares for revenue, which is then awarded to investors as dividends. If you want to take up real estate investment, there are so many options that you could consider.
Real estate investment is risk free
Risk is central to investment. Returns are paid off to investors because they are willing to face the risk of loss or devaluation, such as that experienced in the housing crisis. Real estate investment is not risk free. Any investor who approaches it without understanding the risks involved could face total loss of their portfolio.
Real estate is only ideal as a long term investment
The misconception that real estate only pays out in the long term is not always true. Many investors will go into real estate looking to earn returns over a long period of time. There are many different real estate investment options that you could consider, with returns ranging from the short to long term. By taking up real estate investment for the future alone, you may limit your ability to gain maximum returns. Developing a real estate investment strategy for the long term alone could work, but it is not all there is to real estate investment.
You need to have the expertise to succeed
Many people shy away from investing in real estate because they do not believe they can successfully engage in the practice due to a lack of expertise. Most potential investors will consider alternative investment options, such as stocks and bonds, because they present a relatively easier learning curve than real estate. You do not need to sweat the details by yourself. You may consider representatives such as advisors, real estate agents and property managers to handle your investment. While they may require a fee, which will increase the cost of your investment, they will also provide the necessary expertise to help you achieve success and grow your portfolio. You should develop a thorough framework to help you determine trustworthy, skilled and open representatives who will take your investment to the next level.