When we talk about real estate, we think about long-term investment. This is because house prices have a predisposition to rise over a long period. The increase in the prices of the real estate is higher than inflation so this means that you are making money.
Investing in real estate in 2022. Should I do it?
Real estate is an asset that can hold its value and increase its price over long distances due to the limited supply. They are considered a lower risk investment when you compare them with stocks and bonds because the price of the houses isn’t affected by some managers as is the case with the stocks and bonds.
Also, another plus is that real estate is a physical asset and something you can hold on to.
Reasons to invest in real estate
Here are some of the best reasons why you include real estate in your investing strategy:
Great long-term investing strategy
One of the best parts about real estate investments is renting. Buying a beautiful house and then renting it will bring you a steady monthly income of more than thousands of dollars. Having a nice location for the house is a bonus.
Houses never lose their value in the long term. Instead, the value goes up and you can sell the house in the next couple of years for a profit.
Even if you don’t have enough cash to buy some real estate have in mind that most of the mortgage payments are lower than the monthly rate. This means you can pay your mortgage with the money you get from the rent. Buying low-value real estate also can be a nice idea. You can fix it up and then sell it for a nice profit.
High return on investment
Most people think that a better-investing strategy is investing in the stock market. They are wrong. A study showed that investing in real estate property has a higher return.
In the last 10 years, the annual return for stock market investments was less than 5%, while rental investors had an average return of almost 8%. These numbers are even higher if you have a property in an attractive location.
Real estate is still attractive for investors because of the high return on investment and unlike stock has less risk involved, although you still have to be very cautious before investing. The good news is that the prices of the properties increased by more than 20% in 2021 and this is a trend that will continue in 2022.
Inflation has a small impact on real estate
Based on previous experience we often see how inflation can affect the stock market for the worse. The dollar is losing its buying power and these changes have an impact on the stock market. This is not the case with real estate.
In times of inflation rent and real estate prices are increasing with the inflation.
Due to the fact you have a fixed mortgage rate, your payments will stay the same, but you can increase the rent and you will earn more money without even having to spend money on investing, or renovating your property.
The downside of investing in real estate
As we mentioned above in the article there is a lot of positive stuff when it comes to investing in real estate, but there are some things you should consider before you start investing. Make sure that you assess all the risks before you are involved in real estate. Here are some of them:
- A lot of work – Real estate investing is a lot of work and takes time to find good houses. Then you must manage the property, renovate, lease it out, manage the tenants, etc…
- Only good for long-term investments – Real estate is not as liquid as the stock market and you can’t make big money in a short period.
- High prices – Because the prices for real estate skyrocketed in 2021 you must spend a lot of money to enter this market, so you will need a large investment to buy a property.
Real estate is the number one long-term investing strategy. A survey which was led by Gallup found that more than 40% of the people in America favor real estate investing.
There are a lot of chances for investing in real estate in 2022 and you should start now. So, the choice is yours but we say yes it is a great idea to start investing in real estate in 2022.
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