If you see around yourself, you will observe that every citizen has a dream of purchasing his or her own house and this is the reason why most people invest in real estate rather than invest in the stock market. One of the best ways to invest in real estate is to invest in it with the money which has been borrowed from someone else. But this business also has some unknown truths that may blow your mind up.
Difficult To Be Converted Into Cash
If you are asked what a real investment is then you will probably answer that the investment is the asset that can be converted into cash whenever there is a need. In the real estate business it is not an easy task to convert your property into cash as it is in the stock market, In the stock market, you can easily sell your stocks at the time of your need as there is a ready platform to do so but in real estate, you have to for at least a couple of months to get your property converted into cash unlike in the case of gold and silver as it is also an easy process to exchange these items in the market so as to get your money in return. So you are hardly being advised to possess a piece of real estate as you may be in trouble thereafter.
Real Estate Is Not Transparent
As you can see other stocks, bonds, and items there are listing prices and so are the exact transaction prices but on the other hand, there are different transaction prices than listing prices in the market of real estate so it becomes a herculean task for a buyer to figure out the right price of the properties. This market is full of suckers as buyers have no idea of purchasing the property. Therefore it is advised to enter this business vigilantly.
Transaction Costs Are Huge
In the business of real estate transactions prices are significant as whenever a deal is done a huge sum of money should be given to the government along with losing some money as legal fees, brokerage fees, and appraisal prices which can be seen in every real estate deal. In this way every time the deal is done almost 10-15% of the money has to be lost as transaction prices in which a buyer has to suffer the most because he is not able to move further and end up being stuck in the deal.
Low Return On Investment Than Expenses
It is very common in the real estate business that you have very little returns than what you have invested in the property. In the past years, it has been observed that the return was very high as compared to the investment but it is not always going to happen in the future. Even the properties that have been given on rent also lent very fewer returns as they are risky. So if you want to see a huge return on the investment then you have to put a lot of effort and time into it. Eventually, the returns earned on the properties is similar to that of the investment which is risk-free.
Opportunities Are Limited
When a person buys real estate he has to settle in that specific geographical area and it becomes more difficult for that person to avail of the opportunities. Properties cannot be sold or bought just because of the transaction prices. Therefore it is not advised by so many seasoned real estate agents to buy a property in order to get rid of settling in a geographical area.
Prices Are Leveraged
In the real estate business investors have to spend a huge sum of their income or salary as interest because the prices in real estate are leveraged. They also fear that the prices should not be fallen down in the future so that they will not have to lose a huge sum of their investment when they have already spent a significant amount in purchasing the property and paying interest. There is an old adage that buys a house as soon as possible but this is not going to work today as most of the professional real estate agents are well aware of the property guidelines and regulations.