Many people wonder how celebrities invest their hard-earned money. Most stars have a diversified portfolio that includes stocks, bonds, jewelry, and real estate. In part 1 of this series, we are going to talk about real estate.
Why do celebrities invest in real estate?
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Real estate is one of the many things that people are advised to invest in. It ranks high, along with fine art and jewelry. The reason is that even if the markets are down, they do show an upswing in time. You can hold on to the property or land till that happens. Once you buy the area, the appreciation takes place without effort from you. You need to give it time and see what happens. While the wait may be taxing, the rewards are not.
Real estate investments take into account return on investment. For example, consider an apartment or a condo. As soon as you buy either, you can rent it out. You’re making money from day one on the property to give you high ROI and a regular monthly income as well. You don’t have to wait for years for the property to yield you results. Extend the renting idea to homestay properties as well. There’s money to be made there too. There’s enough and more analysis to say that prices will rise. Be cautious in your approach and wait for the right time to sell.
Investing in real estate is easy as there are enough sites that can give you a head start on how to go about the process. There are no endless manuals to follow, either. Put tools in place and start looking for positions that you’d like to invest in. It’s possible to stay with your regular day job and continue this business as well.
You can check out websites like 100commissionrealestate.com because they have a deep understanding of the business, a sense of what works and what doesn’t, and a bid to get you a lower than market price – they will be able to do it all for you. You can contact the agents to help you with selling or renting the property as well.
The market is no longer about houses alone. It is about commercial establishments as well. The land you buy can work out for malls, gyms, and other spaces. More and more online retailers are thinking about actual stores. Modern malls may have an empty shop space that could prove lucrative to the investor. Buying a few stores could mean a future expansion into anything the buyer may need- shared working space, restaurants, etc.
Real estate investment is not only about selling. It is also about your plans. Investing in real estate will help you get a start on your house dreams. That could be the perfect time for a starter home. Find something that fits your needs, and when it’s time, you will have a place to sell.
Real estate investments are a way to grow your investment portfolio and keep with the times as well. There is a constant need for affordable housing, and your finances could mean fixing the gap without losing your share of the profit. No wonder then that so many venture capitalists are entering the market. So start investing like a celebrity and plan on investing in real estate.
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To summarise, let’s look at the pros and cons of real estate investment.
Pros:
- It is a well-known fact that real estate appreciates faster than inflation, and the more time you hold real estate, the more returns you will get for your investment. Right investors always make it a point to buy when the price is low and sell when the price is high, so wait for the market to correct and invest when the property prices are low, make some improvements to the property, and lo and behold you would have increased your equity.
- When you invest in real estate, you can avail of tax benefits from the government. Long term profits mean tax rates will be lower; you can also avail depreciation. If you rent your real estate, you can include expenses as they are tax-deductible.
- Most people yearn for a steady flow of money. In business parlance, this is known as cash flow. If you invest in real estate and give it out on rent, you will have a steady stream of money, and this can be an excellent source of income.
- If you want to build wealth, then you need to use leverage properly. Property loans are available at meager interest rates. You can get hold of high worth properties with a minimal investment of 20%; the rest 80% will be put up by the bank. If you plan this correctly, you can quickly increase your property holdings. For example, if you put up the property on rent, your tenant will be paying your monthly mortgage, and over time the property will be wholly owned by you. You can sell it, or you can continue to rent it. This way, you will be building equity with proper leverage too.
- When you invest in stocks, you are investing in a business that is managed by someone else. If they make mistakes, then your hard-earned money could be lost, but with real estate investment, the decisions are all yours so that you can manage your investment better. If you feel it is the right time to exit the investment, you can sell your property. If you think that it is the right time to invest more, you can do so too. As a real estate investor, you have total control, and that is how it should be whenever you invest in something.
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Cons:
- It would help if you were patient with your investment. Real estate needs money, and it requires a lot of time for the funds to grow. If you invest in a property and hold it for a decade or so, you will be making profits mostly, but if you want to spend and make money fast, then real estate is not the business for you.
- Renting out properties can seem like an easy proposition, but tenants can cause problems. If a tenant sues you, you will be wasting your valuable time and money on things that you cannot control.
