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What Are The Advantages And Limitation For Estate Investments

Being an investor can be tricky. As a result, due diligence is mandatory no matter what approach you take. Whether you do everything yourself or use industry experts to help, you need to understand the pros and cons of investing in rental properties.

There are certain advantages and disadvantages to real estate companies in Gambia, which best-in-show investors use to their advantage to maximise profits.

Advantages

1. Real Estate Can Be Easier to Understand

As you start to invest your money, you’ll find that there is a lot to know. There are many types of investments – some of which rely on abstract concepts and complex algorithms.

Luckily, we’re here to help make things easier for you. We have explained the basics of investing, so that you learn what you need to know.

Real estate involves buying physical property, which most people are familiar with. It can be an easier investment to understand than more complex investments developed by people with little business experience.

2. Real Estate Is Improvable

The idea that real estate is impossible to purchase is evidently wrong. Buying a stock also means holding onto it for a period of time before you sell it. It’s possible that the stock will go up in value, but unforeseen events can also cause losses.

For example, Gambia real estate is directly under your control. You can’t control demographic and economic changes or acts of God – but you do have the power to control many things relating to the property and tenants.

With an eye for understanding and managing your whole real estate portfolio, you’re able to create tangible value and build wealth.

3. If the Value of Your Financial Assets Declines

Real estate is one of the few assets that react to inflation. As inflation goes up, housing values and rent prices increase as well.

Real estate is a good hedge against inflation, which means that rental properties that are released every year are especially effective. This way, monthly rents can be adjusted to keep pace with inflation.

One of the best ways to protect your investments against inflation is by investing in property. This stat proves this idea, as property is a stable form of investment that has kept its worth for centuries.

The real estate market is inefficient, meaning properties last for a long time before being sold. This also means if you’re looking to sell your home, it might take a while for someone to bite.

4. Real Estate Can Be Financed and Leveraged

You can technically buy stocks and other assets using debt, but in most cases this is very risky because it’s not to purchase a hard asset. Real estate is the exception to the rule. Here, products are usually purchased with debt.

Whether your goal is to purchase “fixer-uppers” or commercial properties, hard money and mortgages can allow you to keep your initial financial outlay small so that you can purchase one property after another. Within a short time span, these investment purchases can snowball and grow into something big.

This type of investing involves the purchase of a hard asset that will typically appreciate year over year. You’ll be paying for it primarily with other people’s money.

gambia real estate
Image Source : Swami India International Limited

Some Limitations Include

There are higher costs associated with the purchase and sale of Gambia houses that can become a lot more expensive over time. This is because as interest rates rise, you’ll also be paying an increased percentage for mortgaging costs.

When you sell a stock, the transaction cost of the trade is usually very low. However, in most cases, when you purchase real estate, this transaction cost is usually much higher.

One of the big reasons many people invest in real estate is because transaction costs are lower. This means you can afford to buy more assets and thus turn a bigger profit.

Warning: Real Estate has high upfront costs, low liquidity and is illiquid for most investors.

1. Real Estate Has Low Liquidity

As with stocks, many investments are liquid and can be traded for a profit in a short amount of time. But real estate is comparatively illiquid because properties cannot be quickly or easily sold, which would result in a substantial loss of value.

Real estate investors must be ready to own a property for hours, days, months and years, even if they’re going to lease it.

2. Real Estate Requires a Lot of Time and Effort

The costs of buying and leasing property are higher than most people realise. Although the initial purchase can be quite expensive, the maintenance and rental prices add up, especially if the house starts to grow mould after sitting empty for an extended period of time.

Not only do rental property investments have to deal with fluctuating demographics and a volatile economy, which can either add or take away from their profitability, but also the amount of cash flow coming in.

3. Real Estate Markets Have Significant Inefficiencies

As we’ve discussed, investors can exploit market inefficiencies to make money. But there are also disadvantages to this, which can illustrate by investors purchasing properties sight-unseen at auction.

Some of the most aggressive real estate investors make their purchase based on minimal information, and don’t know for sure if they’ve made a good deal until paying for the property and inspecting it.

4. Real Estate Creates Liabilities

It’s not just about buying and selling a property. In some cases, the owner might even have to provide housing to a tenant.

Real estate can quickly create liabilities, so it’s important to understand your risk before you invest. Investing in real estate is a great way to make money and diversify your portfolio. In the process, though, you’ll have to take on a lot of financial and legal liability.

One of the biggest disadvantages to real estate investing is how much liability a person takes on when they buy, finance, remodel, lease, and manage residential properties.

Even though these are investment properties, they are often tie to personal guarantees. And while the risks of losing income and profits may be mitigate, the risk of loss is still present.

5. Real Estate Listings Are Very Important For Realtors

If you’re just starting out as an agent, then cheap houses for sale in Gambia listings are essential. They provide a full picture of what a property looks like, including the best features and drawbacks.

That way, viewers of your listing will have all the information they need before walking through a house or talking to its owner.

Listings are a great way to add credibility to your real estate career and satisfy the curiosity of both buyers and sellers.

For example, when a website visitor likes the listings displayed on the page he feels more secure with the site, which makes him feel confident that he can contact the property Gambia about their services.

One of the most effective ways is by posting real estate listings on Google Maps, so customers know that your properties exist.

The World Of Buying And Selling Homes Is Constantly Changing With The Times

With all of the free and relevant data that is available on the internet today, anyone can expect a quick and helpful service from those in the business who can help find your desired location.

Traditional real estate professionals, who have historically relied heavily on old-fashioned marketing strategies, are embracing new technology to reach a much larger potential market.

The triple benefits of a fluctuating market, mounting legal pressure, and an influx of more transparent competitors has led to huge stress for Gambia real estate professionals.

gambia real estate
Image Source : Swami India International Limited

Investing In Real Estate Can Be Complicated

Here Are A Few Things To Know Before You Dive In.

  • Investing in real estate is a popular choice for new investors looking to achieve great results.
  • A lot of people believe that real estate can only increase in value, which is untrue.
  • Disregarding the human aspect of a property, you could see smaller returns or even a decrease in a property’s value if it falls into ruin or isn’t as popular anymore.

Take Away

Like all investments, real estate has both advantages and disadvantages. The best investors leverage those advantages to increase their profits.

Jagdish Patel

Jagdish Patel is a marketing consultant for Swami India International Limited based out of Banjul, Gambia. He manages customer experience and brand development, two key aspects for any firm, and his strong business and marketing abilities enable him to take on many demanding ventures. Steve spends his time away from the office writing informative and interesting blog pieces for many well-known website

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