Find out more about how real estate is a profitable investment option
Real estate is an effective investment option for a number of reasons. It’s a tangible asset that can appreciate in value, and it may be easier to sell than other types of investments. Real estate offers many benefits as an investment. However, there are also some drawbacks that you need to consider before buying real estate. If you’re thinking about investing in real estate, here are some things that you should know: Leverage When you buy real estate, you can use leverage to buy more property than you could afford without borrowing money. For example, if your down payment is $20,000 and your mortgage is $100,000, you have 100% leverage because your loan-to-value ratio (LTV) is 100%. The amount of money that you borrow determines how much equity you have in the property — which means that if the property declines in value by 10%, your equity will decline by 10%. Appreciation potential Real estate prices tend to increase over time due to inflation and changes in interest rates. This mak...