Advantages of Real Estate
1. Real Estate Is Improvable
Real estate is improvable in the sense that you can buy properties like 강남빌딩매매 land and hold it for a certain period with the hope of selling it for a profit. You have the capacity of improving the value of your investments and build wealth when you have good management of your real estate portfolio.
2. Real Estate Properties Exist in an Inefficient Market
Generally, the real estate market is usually full of inefficiencies. Therefore, real estate investments have the potential of making high profits. Real estate investors do make their findings before purchasing any properties.
- Real Estate Can Be Easier to Understand
At first, it may be difficult for you as a new real estate investor to understand everything you need to know in order to make a profit. Investing in real estate tends to be easier to understand because most people already have the idea of real estate to be the purchase of physical properties.
- Real Estate Can Be Financed and Leveraged
Real estate investments that are purchased with a mortgage can be well planned in a way that is safe and affordable. This is because large purchases are meant to be made with a very small initial investment. Taking for instance, the purchase of a hard asset that tends to appreciate yearly with the payment made primarily with other people’s money.
- Real Estate is a Hedge Against Inflation
Real estate reacts proportionately to inflation to the fact that as inflation keeps going up, housing value and rents also go up. Therefore, real estate help in hedging against inflation.
Disadvantages of Real Estate
- Real Estate Has Low Liquidity
Real estate investments are illiquid, because the properties being purchased cannot be easily and quickly sold without a substantial loss in value. Therefore, real estate investors should be prepared in order to own a property for months and years, most especially if the properties will be leased out.
- Real Estate Requires Management and Maintenance
There ought to be management and maintenance of all the properties immediately after they are purchased by 권기성 and the investors. There tend to be immediate financing payments, taxes, insurance, management fees, and maintenance costs, most especially if those properties are empty for a certain period.
- Real Estate Has Higher Transaction Costs
In the act of purchasing shares of a stock, the trade transaction cost is very low. Meanwhile, when a real state is a purchase, the transaction costs are considerably higher. Unlike other investments, real estate transaction costs may significantly affect investment value and make it more difficult in turning into a profit.
- Real Estate Creates Liabilities
Real estate investments include the act of taking on an excellent financial deal and legal liability.
- Real Estate Markets Have Significant Inefficiencies
The real estate market’s inefficiencies tend to be disadvantageous to investors in the act of purchasing properties sight unseen at auction. The most aggressive investors only purchase real estate through a piece of minimal information without knowing if they have made a good deal until they pay for the property and then inspect the property. Meanwhile, rental property investors only deal with the fluctuation of demographics and volatile economies, which is capable of adding or taking away from their bottom-line profits.
In conclusion, the above disadvantages tend to add to the liability a real estate investor takes on while trying to purchase, finance, rehab, lease, manage, and maintain a property. Although investment properties tend to be corporations or personal guarantees that are associated with the business, and the risk to lose the income and profits that were generated by the company.
Areas of the real estate industry
The development includes the buying of raw land, construction of building, renovating of buildings, selling of the building, and leasing of the building to end-users. This means adding value to the land. Therefore, developers earn a profit through the value that was added to the land. The industry of development tries to create a new product which is regarded as a generation of new inventory.
Lenders such as banks, private lenders, and government help the real estate owners to lend money so as to finance their business.
- Sales and marketing
The industry of sales and marketing works in hands with developers so as to sell the buildings they create. This industry helps to create all the materials for marketing and through their agents, they sell the inventory of completed units with the aims of earning a commission.
This is an industry that is saddle with the responsibility of employing realtors that help in facilitating the transaction that occurs between the real estate seller and the buyer.
- Professional services
Professional services such as lawyers, accountants, construction workers, and interior designers help real estate owners to make a successful business
- Property management
This is an industry saddle with the responsibility of helping the owners of the real estate to rent out all the units in their building for people. The agent working under this industry perform the functions of collecting rent, renovating the building, showing tenants all the units in the building, and managing tenants. They earn money by charging a fee from the rent percentage that was given to the owners of real estate.