If you have got some extra money, you must buy a property.
Investing in real estate is the best and safest option.
Regardless of what happens, properly prices will rise anyway and you will still make a
profit.
Isn't that's how people talk about real estate.
Unfortunately, that's not entirely true and if you ask anyone who invests in real estate,
he gonna tell you should think twice before you throw your money in.
That doesn't mean you can never make money by investing in real estate but rather there
are many hidden rocks that most people aren’t aware of that might lead you to lose money.
do home price always rise?
Not really, let's just take a look at some numbers.
According to NAR, for 36 years from 1968 to 2004, home prices did actually increase on
average by 6.4 percent which is good, at least its much higher than the inflation rate.
Unfortunately, that was the last year of healthy growth.
The market suddenly declined and in the following year, the growth was just 1 percent which
is not that great.
And we all know what happened then, in 2008 the market crashed, home prices just kept
declining year after year.
In fact, they fell by more than 30 percent.
It took some time for the market to bounce back, but that healthy growth never came back.
since 2010, home price didn’t really increase if you take into account inflation.
however, some people still say that.
Even if the prices do not increase much, just rent it out
and collect the payment every month.
and in 20 or 30 years years, the rent should pay off your investment and you still end
up with a property that you can keep renting.
What a brilliant strategy.
Unfortunately, it's not as great as it sounds.
First, you won’t rent it out for 25 straight years, because tenants come and go and there
will definitely be periods where your flat will just be empty
but it will still keep draining money out of you, it will be like a hole in your wallet.
Secondly, real estate isn't the type of investment where you just buy and forget about it, it
needs maintenance, it needs renovation.
And in my experience, people don't really take care of a rented property as much as
their own.
So you will have to renovate it more often than if you would have lived there by yourself.
In other words, your real estate investment will never pay off, unless you sell it.
Even if the value of the home rises, you are just getting richer on paper.
you have to sell that property to materialize that wealth before prices fall down again.
Even after these 2 arguments, some people still say that it doesn't matter, its mine,
I will just go and live there by myself and when I will not be around I will just rent
it out.
In my experience that’s a horrible strategy.
because when you buy that home, you buy it base on your own needs that usually don’t
correspond with the needs of the market.
so what ends up happening is that you bought it for yourself and now it's difficult to
rent it out so it just stays there as a liability.
Owning a property that you don’t live in and you can’t rent it out is a pain in the
ass.
That's another reason why a lot of people lose money when investing in real estate because
they are not investing, they are just buying a property thinking that as long as its real
estate, its an investment.
And lastly, real estate is one of the brutally competitive industries out there, because
it's one of the oldest industries in history.
So to find a good investment, you don’t only have to know and understand the market
deeply, but rather look at hundreds of options before throwing your money.
If you haven’t been in real estate business, you have no idea how much time and effort
it takes to find just one good opportunity.
So if you are thinking that, whatever property you buy, you will be able to rent it out,
on the top of that, its value will definitely keep rising, you are mistaken, my dear friend.
And for god's sake, please do not misunderstand me and bombard me with comments.
You understand nothing about investing, you just lost money and now you are just preventing
others to make money.
Yes, I have actually lost money in the real estate when I just started but I have made
much more than I have lost and the point of the video is to clarify some
of the most common misconceptions.
So that if you ever decide to get into this industry, you know what you are dealing with.
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Thanks for watching and until next time.