Is Really Worth to Invest in Real Estate?

It is no secret that real estate investing has always been very popular in the. In fact, more than 80% of the assets of the Americans is directly related to home ownership. However, is it really worth it or is it an investment with more drawbacks than benefits?

Although housing has little competition, but in reality this type of investment presents a series of problems that we must know in advance. Jack Bistricer summarizes them below.

1. The initial outlay is very high

According to Bistricer, investing in real estate is not for everyone, because the required initial outlay is significantly higher than othe investment vehicles, especially if we compare it with an investment fund or with a customized pension plan.

2. You have very little liquidity

The second drawback of this type of investment is that real estate is an asset with very little liquidity. If at any time an unforeseen event arises and you need to convert your investment into cash, you will have to wait to sell the home. The real estate exective, Bistricer, indicates that you must bear in mind that it can not be sold from one day to the next.

3. It involves many indirect costs

The down payment isn't the only money outflow you need to worry about. Homes involve a series of indirect costs that have a strong impact on their profitability and that most investors do not take into account.

Bistricer points out that to the financial costs related to the purchase of the property (taxes, notary fees, property registration ...) are added the maintenance costs, the community of neighbors, the payment of the IBI, the contracting of insurance, the purchase of furniture, repairs… Keep them in mind when doing numbers.

So isn't investing in real estate worth it?

It depends. Jack Bistricer claims that if you want to buy a property for your main residence, you have made your own numbers and they add up, then it doesn't have to be a bad investment. If the purchase price is not exorbitant and your family budget does not jump through the air, the purchase may be a better option than the rent.

However, if your intention is to invest in the long term to achieve a monthly income in the form of rent, or if you intend to reform the house or apartment to sell it at a higher price, be very careful with the numbers you do. Jack Bistricer (follow him on Twitter) advises you to analyze well the pros and cons of your investment in real estate before jumping into the pool.