In a downturn economy, many people are concerned about losing capital and hesitate about entering into new investments. After all, the stock market can plunge without warning, and the rate of interest on stocks and bonds often are less than the rate of inflation. The one investment that is not only recession-proof, but also may actually flourish in a downturn, is real estate. Although there is some risk involved in property investment, the smart investor will find it can be a profitable addition to their portfolio regardless of the state of the economy.
An investment property can be in the form of a fixer flip or a rental unit. Although there can be good money in flipping properties, this process takes a level of expertise that the average person may not have. Property investment in rentals, however, is attainable for any person with a little capital to invest upfront, and the profits will stretch over the long term. Interest rates are low and the pool of eager renters is stable or growing in most areas, so with a little research you should be able to locate a property with the potential to earn hundreds a month over your mortgage payment.
Property investment is an ideal vehicle for your money for many reasons. It offers you two ways to grow your money: through monthly profits on rent and through appreciation of the property itself. Investment property offers the type of monthly return that would be nearly impossible to find in other investment vehicles. At the same time the value of your property will grow over the long term, netting you further profit when you do decide to sell. Although investment property can be managed personally by a hands-on investor who purchases local property, it can also easily be ‘bought and forgot’ by using property management teams that will take care of all the details for you. Real estate, when held long term, rarely loses value and is a great way to diversify any investment portfolio.
Of course, no investment is without risk, and there are a few things to consider before buying property. Owning rentals means that you will have to maintain your properties and finance the costs involved in upkeep. A major repair like a new air conditioner or a roof replacement could eat into your profits. There are also risks involved with having tenants who may be delinquent on rent or damage your property. Although these are important considerations, many savvy investors have utilized property investment to enrich their portfolios, and it’s worth a look to see if this option is right for you as well.