According to Andrew Carnegie, the Scottish-American Billionaire, 90% of millionaires become so through real estate. The benefits of investing in real estate are numerous. With well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, diversification, and leverage of real estate to build wealth.
Thinking of investing in real estate? Here are 5 reasons why real estate is considered a good investment.
1. Provides Steady Cash Flow: Cash flow is the net income from a real estate investment after mortgage payments and operating expenses have been made. A key benefit of real estate investment is its ability to generate cash flow. When you buy or build a house, and rent it out to tenants, that property starts to earn you rental income (monthly or yearly depending on the contract with your tenants). With the high demand for accommodation and growing inflation, rent prices are always on the rise. Higher rent prices mean more income for you, the landlord.
Compared to other investment options, the income from real estate is the most steady. For instance, bank savings (another form of investment) usually attract interest payments that may be steady but are often very small compared to the returns you can get from investing in real estate.
The first step to achieving this benefit is to find the right real estate company to invest in. One of such reliable company is Casafina Development, with its unique financing system, you get the opportunity to acquire a short-let apartment at an affordable price and make your ROI through rental income. Click here to learn more.
2. Usable as Loan Collateral: Collateral is one of the biggest obstacles faced by entrepreneurs when requesting a bank loan to start a new business or acquire property (such as a factory, machinery, or equipment), especially in Africa. When banks ask for collateral, they want something that is equal to or greater in value to the loan amount you are asking for. Banks usually prefer real estate as collateral because it is known to continually appreciate in value. Unlike your car which loses value every day, the value of real estate properties is more likely to grow. When compared to stocks (which some banks accept), the value of a property cannot vanish overnight. So, when you invest in real estate, you can use the properties as leverage to get a loan from banks and other lenders.
3. High Return on Investment: Real estate always grows in value, especially in developing regions like Africa where the property market is not as mature as that of North America or Europe. Lagos and Nairobi are some of the African cities that are currently rated as hot property markets. Due to the huge demand for shelter in many African cities, the returns on real estate investment are one of the highest in the world.
Although buying and selling real estate may not be your main investment goal, it still serves as insurance for the future, because if you need to sell your property sometime in the future (for whatever reason), you will still make a handsome return. You can earn rental income for many years or you could sell the property. Either way, you make money and earn a profit on your real estate investment.
4. Low-Risk Investment: We have heard of stock market crashes and banks going bankrupt. Although real estate values often fall, it is not usually a very bad situation. Even when property values fall, you will still earn rental income from the property. Also, real estate is physical and tangible compared to stocks, bonds, and many other intangible forms of investment. In times of high inflation, economic boom, and bust, real estate investments remain robust and will continue to earn you income.
5. Improvable: One of the most unique and attractive advantages of real estate is that it is improvable. Real estate is a tangible asset made of wood, brick, concrete, and glass, you can improve the value of any property with some “elbow grease” and “sweat equity”. Whether the repairs are structural or cosmetic, do it yourself or hire someone, the principle is the same. You can make your real estate worth more by improving it.
In summary, investing in real estate is the easiest way to generate wealth and achieve financial security. Do you want to diversify your investment portfolio and earn maximum ROI on your real estate investments? Then you should join the smart investors at Casafina Development where you can earn up to 28% interest in strategic real estate investments. Click here to chat with an investment advisor now.