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Investing in Real Estate - A Great Way to Diversify Your Portfolio

Updated on November 29, 2011

Real Estate Investing

Investing in Real Estate is always a good idea if you can afford it, and is also a great way to diversify your portfolio. There is such a wide range of things you can do in Real Estate Investing, from just owning your own home, to getting into a partnership on a construction project. Some like to buy empty lots, some would love to buy land overseas.

As with any kind of investing, there are pluses and minuses to Real Estate investing. Some of the negatives include having difficulty getting your investment back once you have taken the plunge. Another may be that the particular real estate is overpriced in some markets, while you see undervaluing in another. Things are subject to zoning laws and environmental issues and those things can change and are out of our control.

The pluses to investing in real estate can include things like having a hedge against inflation, and allowing for more tax deductions in some cases. Of course a huge one that sometimes there are just huge profits in certain markets.

Source

Borrowing to pay for Real Estate

Some people will leverage, or borrow money to pay for their real estate investments. While this may be a temptation, since often you can sell at a profit and benefit, its not always the wisest choice. You can't control or always predict what will happen if prices go down. Your losses can be very great if you decide to leverage. The appeal is usually that there are so many cases where the real estate increased in value and often significantly. Unless you have a lot of money to invest and aren't needing to sell quickly or on a time frame, I would recommend against borrowing for obvious reasons. It makes sense that its hard to sell quickly at times, and especially for the price you are hoping for.

Real Estate is a great investment
Real Estate is a great investment

Vacation or Retirement Properties

Second homes are appealing for many reasons, including investing, vacationing and personal use. Some people really appreciate the extra income that can be had which can come through renting out such a property. It gives some flexibility in that sense if you should have a time in life where you need the income more than you need the "time away." Pay attention to things like possible cuts in resale value due to overbuilding, and complicated rules limiting their usefulness as tax shelters, etc.

Real Estate Investing Poll

Would you like to Invest in Real Estate sometime in the future?

See results

Comments

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    • oceansnsunsets profile imageAUTHOR

      Paula 

      6 years ago from The Midwest, USA

      Scottie, thank you for your comment and visit. :)

      Sam, thank you very much for stopping by and for your comment!

      Jokylu, thank you so much for stopping by and for your tip. I totally agree that doing one's homework first can make a huge difference. It can save or help generate more money in the long run for sure. Wishing you the best.

    • Jokylu profile image

      Jokylu 

      6 years ago from Waratah North, Victoria.

      A good and useful hub, I am interested in realestate and I have found a great tool to help. The key is doing your homework first as with any investment.

    • profile image

      Sam 

      6 years ago

      I liked reading your hub!

    • scottie g profile image

      scottie g 

      7 years ago

      Here's a great link for the rental property investor

      https://hubpages.com/money/Rental-property-profit

    • oceansnsunsets profile imageAUTHOR

      Paula 

      7 years ago from The Midwest, USA

      Thank you Phoenix!

    • PhoenixV profile image

      PhoenixV 

      7 years ago from USA

      Real estate is the best investment "they stopped making the stuff long ago." Rated Up!

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