Is Investing in Real Estate too Good to be True?

Many people have profited from real estate investment, and when you see properties skyrocketing in value in a short space of time, you may think that perhaps property investment is too good to be true. Not only is there potential for your property to increase in value, but you can also earn rental yields, paid by your tenants. With guaranteed yields, enormous projected profits and huge demand, it looks like property investment is a money-making no brainer.

However, there have been occasions when an investment has been too good to be true, and caution is always advisable before investing. Though property investment has a wide range of benefits, it also has disadvantages, and these must be weighed against each other. There are some drawbacks to real estate investing, and if a deal seems too good to be true, it is essential that you perform due diligence and thorough research. Look for any hidden clauses, any guarantees, and make sure you are aware of all terms before investing.  There may be extra costs, like ground rent, maintenance costs and solicitors’ fees which you will need to cover, and these may cut down your profits.

It is important to bear in mind that property values can go down as well as up, and there may be times when your property is worth less than you paid for it. Property, like any asset, is at the mercy of the market, so if property prices go down, yours will too. If you do want to sell your property because of an increased profit, then it is also worth pointing out that selling property can be a time-consuming and expensive process, which means it isn’t advisable for investors looking for speedy returns. 

However, overall, real estate continues to perform well as an asset, with house prices rising by over 3% in the UK, despite some of the toughest economic times. Demand for rental property in the UK is constantly growing, with almost 5.8 million households expected to be living in private rental accommodation by the end of 2021. Currently around a fifth of the population rent from a private landlord, with that number set to grow impressively. Any other asset which could demonstrate such demand would be high up on any investors’ priorities. Because there is such high demand, prices have also gone up, so landlords are earning more rent.

Though property investment may seem too good to be true, this is oversimplifying the process too much. Look for a property investment company that shows ample due diligence and has a proven track record, like RW Invest. There are some outstanding opportunities available for property investors, but there are also disadvantages and considerations that need to be made. If anyone tells you that you will not lose money, be wary, there is always a chance you can lose money by investing it. However, investing in real estate doesn’t need to be too good for true. It can be a truly lucrative way to invest your money and grow your wealth, you just need to properly evaluate each opportunity and make sure you are as well-informed as possible. By prioritising your income and by looking for rental yields and tenant demand, you can ensure that your property investment pays off for you.