PROS and CONS of Real Estate Investing
PROS
You get an additional income stream. Duh! This is the primary reason that investing in real estate can be such a good idea if it makes sense for you financially. (Of course, this one only applies to rental properties and house flipping.) Your net worth will increase. Investing in real estate will boost your net worth, which will continue to grow as the value of your property goes up. You can qualify for tax advantages. Real estate investors who itemize their taxes can take advantage of some deductions. While getting a tax break isn’t the reason you should make a real estate investment, it’s a nice perk. It usually takes a lot of work. Like we talked about earlier, the idea that becoming a landlord or flipping houses is a way to earn money with minimal effort is just plain wrong. There’s almost always a ton of time and energy involved. There are risks. As with any type of investment, real estate investing isn’t risk free. Luckily, you can limit your risk—just be sure to pay cash for investments beyond your personal residence and have an emergency fund at the ready. You aren’t guaranteed to make money. While investing in real estate can be a great way to earn extra income and increase your net worth, it’s not a guarantee—especially if home values in your area don’t go up as much as you expect or you can’t find a tenant to fill a rental property. CONS
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