Your house is usually the first thing that comes to mind when you consider real estate investing. Real estate investors, however, have many more alternatives when it comes to investing, and they aren't just physical assets like their own house. Real estate has become a highly popularized investment vehicle, skyrocketing in demand over the past 50 years. So why would you want to miss out on all this commotion? Here’s a breakdown of what property investing really is!
Property As An Investment
An investment property is simply a piece of real estate acquired with the purpose of generating a profit through rental income, eventual selling of the property, or both. An individual investor, a group of investors, or a company may own the property. A long-term or short-term investment can be made in an investment property. With the latter, investors frequently participate in flipping, which is purchasing real estate, remodeling or renovating it, and then selling it for a profit in a short period of time. Other assets that an investor purchases for the purpose of future appreciation, such as art, stocks, and land, are also referred to as investment properties.
The term "investment property" refers to a home that isn't utilized as a primary dwelling. They bring in money in the form of dividends, interest, rentals, or even royalties that aren't part of the property owner's usual business. And how you use investment property has a big influence on its value. Investment properties are not main residences, although they do provide revenue.
Investors will occasionally undertake research to identify the best and most profitable use of a property. If an investment property is designated for both commercial and residential use, an investor would typically evaluate the advantages and disadvantages of each until they determine which offers the best prospective rate of return for their own personal goals, they then make use of property in whichever method they choose.
A second home
A “second home” is a term used to describe an investment property. However, the two do not always imply the same thing. For example, a family may buy a cottage or other holiday property for their own use, or someone with a primary residence in the city might buy a second home in the country as a weekend escape. In some situations, the second property is used for personal purposes rather than as a source of revenue. A second home is only an investment property if it adds to your revenue stream.
Real estate may improve an investor's risk-and-return profile by providing competitive risk-adjusted returns. In comparison to stocks and bonds, the real estate market has a low level of volatility. When compared to other traditional sources of income, real estate is very appealing. Numerous Filipinos have gone above and beyond to follow their goals great distances away from home and to provide a better life for their loved ones back in the Philippines. By emigrating, all in the hopes of giving the greatest life possible for their families can become somewhat of a reality.
According to the Philippine Statistics Authority's 2019 survey, the overall number of Overseas Filipino Employees is presently 2.2 million, indicating a high number of workers who have left home in search of better pastures. While Filipinos are known for going to great lengths to ensure the welfare of their loved ones, they are equally adamant about safeguarding their own future.
Why should an OFW invest in real estate back home?
Due to the worldwide pandemic, uncertainty is around every corner, every OFW should know how to appropriately manage their hard-earned money to guarantee that none of it goes to waste. Of course, every OFW wants to make the best use of their money. However, utilizing money just to meet family necessities must be temporary, therefore OFWs should look for reliable investment opportunities to make their money work for them as well. Stocks, mutual funds, companies, insurance policies, and even cryptocurrencies are all viable alternatives. However, real estate investing is an excellent choice for OFWs.
Investing in a variety of tangible assets may be hazardous. Risky not because the value may fluctuate, but because it may be easily stolen from you. Investing in jewelry, for example, might be a good idea, but if you don't keep it safe, it could be taken from you at any time. This is not the same with real estate investments. No one will attempt to steal this type of investment since it is almost physically impossible to steal in the first place. If someone tries to steal it, they have to go through the hassle of filing countless papers just to get the property off your hands.
Real estate property is the finest investment on the market. It trumps other investment vehicles because it appreciates in value. While other physical assets like automobiles and luxury items degrade rapidly, real estate may increase in value even while you sleep. An OFW should think about purchasing real estate while still working overseas rather than blindly saving their earnings. When you return home permanently, you will be shocked at how much the land will cost. Essentially, the amount of money you put in real estate now should be more than what it was originally worth.
Real Estate is a worthy investment.
One thing that some OFWs want is to have a backup plan in case of an emergency, such as another source of income. Another motivation to buy real estate is that it may be leased or rented out. While providing additional income for your loved ones over time, a property investment can also provide you with a sense of financial security because it will grow in value over time.
Real estate may be a good investment that can give a regular income and help you develop wealth. Still, illiquidity, or the difficulty of turning an asset into cash and cashback into an asset, is a disadvantage of real estate investing. Keep your expectations reasonable, and do your study and research before making any decisions, just like you would with any other investment before jumping into the world of property investing!