You want to build up a wealth, without taking too much capital risk, rental property is the best option. Benefit of this type of investment: if you don't have the cash to buy plots in prime locations, you can borrow funds. Real estate is the only investment accessible on credit, it is even advisable to finance your acquisition through a loan, because you will benefit from currently exceptional financing conditions.
In addition, you will benefit from the leverage effect of credit, that is to say that by investing a small amount at the start, you will build up significant wealth over time, once your loan has been repaid. The savings effort will remain sustainable, since your monthly loan payments will be largely covered by the rents collected.
Be careful, however, despite its advantages, an investment in real estate must be considered for the long term, at least ten years to amortize the acquisition costs and hope for a capital gain. If you are still hesitating before investing in stone, here are three good reasons to do so.
1. An attractive overall ROI
If the very low level of interest rates is good news for borrowers, it is less so for investors. Indeed, today it is difficult to find a financial investment that offers a return greater than 2%, unless you accept a dose of risk. By investing in real estate, you will be able to obtain significantly more attractive returns. Depending on the type of investment, they currently oscillate between 1.5 and 5% for a moderate risk, and reach double for an investment in the stone with a greater hazard.
2. The possibility of diversifying your assets in several markets
By investing in plots, you can broadly diversify your assets. First, because the real estate markets do not evolve in the same way as the financial markets. Then, because depending on the type of asset chosen, you can mix between different rental markets. For example, by opting for "safe values" in the hypercentre of large metropolitan areas, you will guarantee your return without taking too much risk. On the other hand, by favoring the districts of the future in cities undergoing major metamorphosis, you will boost your profitability, you will be able to hope for great capital gains in the long term, but will also suffer a greater rental risk.
3. Securing part of your assets
In the long term, real estate remains the investment that presents the lowest risk, provided you choose your investment well at the start. Because even in the event of a strong crisis, prices adjust slowly downwards without collapsing in a few days. The only downside: in the event of turbulence, it is more complicated and longer to sell real estate assets than financial assets. You should therefore always keep some cash in your portfolio to face a hard blow.
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