Real estate offers opportunities distinct from buying stocks or bonds. Purchasing a tangible asset, like a home, may increase an investor’s sense of agency, and the basic process of buying and selling a property at the right time may seem more intuitive than following stock market behaviors. Structures like real estate trusts allow individuals to customize their level of involvement by hiring a third party to manage the properties they purchase for them, creating a partially or entirely passive income source. Protecting against adverse economic conditions by diversifying a portfolio is also easier to understand than doing so for stocks, because a buyer can invest in homes or retail spaces in different geographic locations.
Simultaneously, investing in real estate presents unique challenges. Depending on the properties available locally, the price of buying one may serve as a high barrier to entry. The cost of buying multiple properties and restoring them entails a steep financial investment. Furthermore, if the housing or commercial real estate market declines, an investor may fail to recuperate costs.
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AuthorVice president, managing director of business development, and senior staff attorney at BETA Abstract, LLC Archives
January 2021
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