Before investing in any real estate investment, be sure you know the 5 major Advantages and Disadvantages of Real Estate that are involved in the investment. It is the best investment platform as long as you are careful about researching your purchases and are willing to hold properties for an extended period, there is a good chance that your investments will pay off handsomely.

However, general economic conditions can influence the value of real estate and a great deal of your time will be needed to oversee these properties, so you must be willing to grind it out over a long period to realize the benefits of real estate investing.

Here are the major advantages of real estate investment.

5 Major Advantages of Real Estate.

1. It Generates  Residual income flow.

2. Real Estate Defers Taxes.

3. Real Estate Investing Is a Hedge Against Inflation.

4. Real Estate Income Gradually Increases.

5. Real Estate Gives You Control.

We are going to discuss on major benefits of a real estate investment which happens to be one of the best investment platforms that have several good reasons and benefits which is why it makes sense to invest.

consider the following items as the major advantages of real estate investment.

1. It Generates  Residual income flow. 

this happens when you create a monthly cash flow that allows you to build your residual over time.

it is a one-time payment that an investment needs, that in return to stand the chance to gain more than you have invested because in time to come the investment generates an income.

However residual or passive income is an awesome way to amplify your current income and help to create your financial streams. this is one of the best ways to improve your real estate investment through rental properties, investors can create a steady cash flow through rental income while they also have the option to make an improvement to the property and build equity.

2. Real Estate Defers Taxes.

Here in this case the investors can defer the taxes when the sale of the investment property and also use the equity to buy another property which is known as a 1031 like-kind exchange, you may be wondering what is the meaning of this code, this happens to be an exchange cold named in section 1031 of the internal revenue code, which allows the investors to defer taxes by selling one investment property and purchase another greater property which can occur within a specified period.

3. Real Estate Investing Is a Hedge Against Inflation.

this is one of the assets that hugely go against inflation as it is the best investment that provides the best hedge against inflation.

this usually performs well in inflationary climates; REITs are the most feasible way to invest.

Adding global stocks or bonds to your portfolio also hedges your portfolio against domestic inflationary cycles. Another option is more exotic debt instruments like TIPS. However, inflation reduces the value of money owed in the future. The advisor and invest should be aware that as mortgage rates rise during periods of inflation, just note that when inflation goes up, housing values and rents go up as well.

But real estate is generally a good hedge against inflation because rental properties that are released year to year are especially effective since monthly rents can be adjusted upward in an inflationary period.

4. Real Estate Income Gradually Increases.

when the rental rates increase at the rate of inflation, your income will gradually increase as well since you have cleared off the mortgage fixed rate. I know you did be wondering what is the "mortgage" this is an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you've borrowed plus interest. in other words, this is your main expense.

5. Real Estate Gives You Control.

Buying and owning real estate is an investment strategy that can be both satisfying and lucrative.

some the investors buy shares in which the rate income can either go up or down without them having any control over the investment but this won't be the case for the real estate investors with an active mindset that can go as far as searching for the best deals, he controls the costs and also judges who to be a tenant and when to sell his properties. He gets involved in all aspects of the investment processes.

He can even impose more certain controls over the investment and also how much to make on the investment.

5 Disadvantages of Real Estate Investment

Despite the good reasons that real estate generates, it also has its disadvantages that you need to be aware of before investing in it. Here is a major disadvantage.

1. High Capital Requirement

2. Real Estate Requires Maintenance

3. Real Estate Property is very Illiquid.

4. Real Estate Investing is a long Grind 

5. Real Estate is Impacted by Rent Control

1. High Capital Requirement

Real estate's biggest disadvantage is that it requires a lot of money to start up a real estate investing business, we all know that buying lands and properties requires considerable time and effort and also a huge amount of money, so does it requires a huge capital if you want to go far in real estate investment. this is one of the reasons why some people go for loads to invest in real estate property.

Many real estate investors have indulged in a mortgage to get a higher capital to invest in the real estate business.

2. Real Estate Requires Maintenance

Real estate needs a high level of maintenance because sometimes issues arise from the real estate's properties which may require a fix-up or replacement of the property in other not for it to lose its value. This will cost a lot of money whereby wiping up your cash at hand.

You may not just only pay for the repair and replacement of the property such as leakage roof, failed water heater, etc, which is seen as internal damages. but you will have to also pay for the society's maintenance fee as well.

 

3. Real Estate Property is very Illiquid.

Real estate investment is not a liquid rather it is a very illiquid investment meaning it is very difficult to sell off the properties within a very short period, this may be a very big problem for you if you have an immediate need of cash to settle some problems. And if there are some alternatives for you to sell the properties at that time vulture investors would want to offer lesser cash immediately at a precipitous discount to the market values of the property.

For these reasons, it makes the real estate investment not liquid and stocked for a very long period of time.

4. Real Estate Investing is a long Grind.

This simply means that the real estate investment takes a long period of time for you to make back your money and your gain on it. but the longer your period your properties stays the higher the values appreciate in most cases, depending on the types of properties acquired and also the nature of the tenant, it is necessary your spend your time managing those properties if you can manage them directly.

5. Real Estate is Impacted by Rent Control

In the situation whereby the investment is on the residential units, there is every possibility that the government will impose rent controls and also some tax too, which will have to limit your ability to make raise funds. although you can request a rent control board from the local government for a rent increase. but this can only be involuntary.

Summary

Real estate is the best investment options available. As long as you are careful about researching your purchases and are willing to hold properties for an extended period of time, there is a good chance that your investments will pay off awesomely.