We have known it for some time: a savings account nowadays yields virtually nothing. Negative interest rates combined with inflation can even make you lose money by saving. Would you still like to invest your money wisely and make a certain profit? Then investing in real estate is advisable, and more specifically in homes for rent. Immowi explains.
Anyone who invests in real estate and subsequently rents out the property will first and foremost have an additional source of income. It is assumed that you can rent out your purchased property at a slightly higher price than your loan, so that you can receive a minimum amount of extra income. With a savings account, on the other hand, you often see the amount in your account unchanged. Due to inflation, in some cases that account is even shrinking!
A real estate investment, on the other hand, is a good protection against inflation. The value of real estate has only increased in recent years. Real estate prices always fluctuate with price increases. That means that when inflation rises, this can also have a positive effect on your property investment.
But these price increases also mean a more expensive market to buy your real estate. So investors have to dig deeper and deeper into their pockets. The corona crisis has also had an impact on this. Read more about it here.
Investing in real estate vs. investing in shares
Don’t feel like leaving your money in your savings account and want to invest in shares? Of course you can! However, it is an art to keep an eye on the stock market and to anticipate a very unpredictable market. Consequently, investing in shares carries a much greater risk.
Investing in shares does not only require a financial effort as investing in real estate does. Because your knowledge of the stock market must be so extensive that you can make the right investment, it also requires a large investment in time. Time to read up on the investment and time to continuously follow it up. A real estate investment has a concrete, physical value and requires less precise follow-up work.
You can also borrow money for a real estate investment
To be able to invest in real estate, you do not need to have the full amount for the asking price on your account. Only a certain percentage is needed to take out a loan from the bank for the remaining amount. You pay off that loan over time. But beware: the cost of this depends very much on the interest rates at which you can borrow at the time.
If you want to sell your real estate investment again, you can. With the right asking price, you pay off your earlier loan and you can even make some profit. After all, real estate undoubtedly increases in value.
When you want to invest in shares, you will not get a loan from the bank or the state. This is because investing here is too risky for the lender and consequently there is also great doubt about the ability to repay the loan in time.
Want to know more about real estate and the latest trends in the market? Then browse through our blogs.