Real estate investment is one of the most popular ways to build financial security and increase wealth. Unfortunately, the real estate market is also widely misunderstood and sometimes underestimated. On one side people often think that the investment side of real estate is too expensive or complex. In other scenarios, people underestimate the planning and thought that should go into real estate investment.
If you are looking for ways to spend your money wisely in 2018, then real estate investment could be the way to go. These are three reasons why now could be the right time for you to expand your position on the property ladder.
Interest Rates Are Only Going to Go Up from Here
Interest rates in the United States are on their way up, thanks to a strengthening economy and a strong sense of confidence at the Federal Reserve. While this is an indicator of overall health in the economy, it also makes lending and real estate investment more expensive.
If you are in the position today where you can afford to purchase a second property for investment, even with a mortgage, then it will be better to get in early rather than later. You will enjoy lower interest rates for at least a period of the mortgage, which will ultimately mean that your investment will be more affordable.
At this stage, the longer you wait, the more expensive a mortgage will be.
Real Estate Improves the Diversity of Your Investments
If you currently hold bonds, stocks, or a share in a larger investment fund, then real estate can be a good way to diversify.
Diversification is not only about finding more ways to make money; it’s actually a strategic way to ensure that any potential losses are minimized. If any particular market takes a significant hit, then you will have enough in other investment assets that your portfolio won’t be completely wiped out.
If you’ve hedged most of your investments elsewhere, then it’s worth looking at real estate in 2018.
Real Estate Values Could Go Up in The Near Future
Even with higher interest rates, a strengthening economy is going to mean that there will be more demand for housing. This can make the real estate market highly competitive, but with limited supply.
In other markets competition pushes prices down, however, the real estate market could actually grow in value because of increased demand. Home buyers in particular may be willing to pay more to live in developed cities and suburbs across the United States. This could mean that your investment today will be worth more in five to ten years’ time.
In most cases, real estate investment typically yields a higher return than cash savings, even with fluctuation in market prices.
Always Consider All of Your Investment Options
It’s always a good idea to spread your investments as much as possible. If you have additional funds that can be used for a down payment on a second property for rental or for resale, then it’s an option that you should consider. Always invest wisely and avoid borrowing money when you need initial capital for an investment.
With wise property selection and a willingness to stick with your investment through market changes; you could stand to make a significant return from a sale or ongoing income through rent or lease payments.
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