Owning land and real estate has always been considered a sign of wealth. As in the past, even today it is said that the rich person owns several houses or apartments. Real estate is not just a place to live, it is an important investment that differs from financial assets and other types of real estate that anyone can invest their savings in. There are significant benefits that a property can bring to its owner that must be considered when making an investment decision. Stability and continuous growth in real estate prices When we invest in something, we expect to get back our investment, but we may also get a return on our investment. Every investment carries some risk that every investor needs to know before taking that risk. In contrast to investments in financial instruments such as stocks, bonds or mutual funds, investments in land and real estate are considered a safer form of investment. Large financial losses caused by the volatility of the financial market, but also the foreign exchange market, have affected public confidence in such type of investment. For financial investments, it is also necessary to have specialist knowledge of the financial and securities market and to consult approved brokers. The lack of knowledge about the financial markets is one of the reasons why many hesitate to invest in venture capital in order not to suffer significant financial losses. Some are unaware of the risk involved in the forex and securities markets, and those who are less risky about that risk prefer a different type of investment. They mostly invest in properties that are in attractive locations, often well-known travel destinations. Real estate prices in interesting locations are constantly increasing and stable, which is one of the biggest advantages for their owners. Thanks to the growing recognition of Croatia as a tourist destination, land prices and real estate in attractive locations on the Adriatic Sea or near major tourist destinations are steadily increasing, guaranteeing investors not only return on investment but also the possibility of additional income if they decide to sell. Stability and profitability of investments The stability and constant growth of prices guarantees the increase in the value of real estate. Investing in this type of real estate is considered to be more stable compared to other types of investments. The value of financial assets can fall "overnight" because of various economic and political events. Real estate prices are maintained. While the value of money and stocks can rise but also fall significantly, real estate prices are maintained. – The owner of a block of shares is, for example, never sure if this will generate additional revenue the next morning, or if its price will drop drastically, leading to significant financial losses. On the other hand, the value of a purchased property cannot fall to zero, but only increase, especially in the case of further investments in renovation and equipment, but also due to market conditions such as increased demand or attractiveness of the land – circumstances that the investor cannot control. Therefore, it can be said that real estate investing, unlike investing in financial assets, allows for greater control over the investment. If a real estate market falls in value and you want to sell your property, you can always wait or continue investing to try to increase its value. Usually, when you trade stocks, all you can do is hope that the company you invest in will emerge from crisis or sell your stock to salvage what can still be salvaged. By investing in real estate, you are your own boss, while others are always deciding your fate in the financial market. When you invest in real estate, you decide for yourself, while someone else always decides your fate in the financial market. Buying real estate as a way of saving Interest rates on time deposits are getting lower and savings less attractive. Because of this, many are looking for an alternative income or method to increase their capital. As discussed earlier, investing in stocks and bonds is too risky for an investor who wants to preserve the value of their wealth, so they choose to save. Due to the low interest rates on savings, many prefer to buy real estate rather than save at banks. The property can be used for various purposes and bring in income well above the term deposit interest rate through the use of rental opportunities. Interest rates on the country continue to fall, while rental prices for houses and apartments are increasing – which will continue to be the case in the future. Zagreb and the Adriatic are the frontrunners with the highest rental prices. Such market realities prove that real estate is always worth owning as it is not only a place to live but also a source of potential income.If you choose to invest your savings, the amount you receive with interest rates is significantly less than the income you would earn by renting your house or apartment. Bank interest rates on euros are now under one percent and a savings of 100,000 euros at an interest rate of 0.60% per year would make you just under 600 euros per year. After the tax deduction, this amount is reduced to EUR 520.80. In contrast, renting an apartment of the same value, with rent of 3000 kuna per month after deduction of taxes – which amounts to 297.36 kuna per month, brings in 32,431.68 kuna per year. Renting on a monthly basis is common in continental Croatia, especially in Zagreb, where many students are looking for a rental apartment. Housing is being sought because the number of foreign students is increasing. On the Adriatic coast, a daily or weekly rental dominates due to the strong tourist turnover and therefore rental income during the tourist season is short-term and higher than the monthly level. Various online rental platforms allow tenants to fill their accommodation capacities 100% quickly and cheaply throughout the season. In just a few months, it's possible to make a profit that you might never realize with the savings in the bank. Because of the possibility of renting real estate and getting higher income, the real value of real estate increases – especially in the tourist season. Well located properties with such characteristics are increasingly desirable in the market and their prices are increasing due to high demand. In addition to apartments, domestic and foreign tourists are increasingly interested in holiday homes, which are becoming increasingly popular. This increase in property value allows the owner to sell the property at a higher price. Income from renting out real estate can cover significant expenses such as repairs, renovations, maintenance, as well as paying back the loan needed to purchase real estate. After paying the costs, only the net income remains. In this regard, the tenants pay for the investment and you, as the owner of the apartment, can use the remaining amount for new investments or as a retirement plan. There is a growing trend: future retirees are selling their houses or apartments larger than 100 square meters and buying smaller apartments for themselves. The difference between buying and selling will be used for living expenses once they retire. Use of real estate for own purposesIn addition to the financial benefits that a property can offer its owner in the form of rental income, there are also benefits to choosing private use. The property offers comfort, it is ours and we do not feel like guests or strangers like in a house that belongs to others. It is where we live and as its owners we have an obligation to pay for its running and maintenance costs and to invest in it to preserve its value. Own ownership implies no rental payments as well as the cost of hotel accommodation. As a property owner, you can only benefit from it, either in the form of unpaid maintenance fees or renting your house or apartment. Steps before deciding on investment Numerous advantages of investing in real estate must be used correctly. Before making any investment, it is important to be well informed about the market situation and to analyze the situation on the market. Also, the choice of the appropriate place, the size of the object and premises, as well as their arrangement should be taken into account. The more attractive the location, the higher the real estate prices. However, it is likely that these prices will increase in the future and you need to choose the right time to buy property. The attractiveness of the location makes it easier to find tenants if you want to rent out the property. In addition to location, it is also necessary to find a property that is appropriate in size for you. Due to the characteristics of land and the surrounding area, it is often not possible to build properties of a size that suits most investors. In cities they usually refer to smaller dwellings, while in the periphery mostly large dwellings are found. It can be said that the location and size of the room often do not coincide. In addition to the size of the room itself, the layout of the rooms is also important and the purpose of the property must be taken into account. When it comes to apartments, it is important to take into account the characteristics of the building, i.e. the floor, as well as the building itself. All of the above elements must be considered when buying real estate to make the investment worthwhile. The higher the value of the real estate, the more investment time is needed, but the return period of the investment is longer and it is worth considering whether you are satisfied with quick, but lower income, or are you ready to invest more and wait longer to get a higher return on your investment.
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