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How Safe is Investing in Real Estate?

Updated: Jan 17, 2023

What Does it Mean to Invest in Real Estate?



Real estate investments are a great way to diversify your portfolio and can create generational wealth when done right! There are several ways you can invest in real estate when getting started.

There are two different ways you can invest, direct and indirect:

  • Direct investing includes aspects such as owning and managing properties, more specifically, renting out properties, flipping houses, and even simply waiting for the perfect selling opportunity to arise.

  • Indirect investing includes owning Real Estate Investment Trust (REIT) shares.

As you can see, investing in real estate does not necessarily mean you need a tangible property, and there are many options you can explore. Real estate is lucrative, but that does come through time!


Important Things to keep in Mind When Investing


With every long and short-term investment, always take into consideration if it’s suitable for you. There are essential factors you must keep in mind when looking at investing in real estate.


Location

Location is an essential factor that directly correlates to profitability in real estate investments. Before you invest, look around the vicinity and how accessible other amenities are. Ask yourself questions: How convenient and accessible is this area to the essential stores and facilities? We at Pal Property Solutions provide expertise in Hamilton, St. Catherines, New Brunswick, and currently expanding into the United States! We have bought, sold, and refinanced multiple properties worth over $14,000,000.


Purpose


As per every investment, always outline your purpose. Depending on how you choose to invest in real estate, although it is a high-value investment, it can sometimes offer low liquidity, which can lead to financial stress if any emergency arises. Take the time to identify if you want to buy and sell (either long or short-term) or buy and lease so that you can plan your finances accordingly.


Trends

The real estate market can be unpredictable, as they fluctuate rather often, so it’s essential to be updated with trends. A few trends and qualitative numbers to look into include mortgage rates, new constructions, home prices and sales in your desired market etc.


Is Investing In Real Estate Safe?


All investments have advantages and disadvantages; one constant disadvantage will always be the risk factor. Real estate has risks; however, they can be mitigated when you do your due diligence and consider the above factors! Nonetheless, there are reasons why real estate can still be safe despite having risks, including:

  • The value of your property will increase over time.

  • If you choose to invest in a physical property, you will have a tangible asset with high value.

  • Diversifying your investment portfolio is always a beneficial way to reduce risks. Real estate investment diversification includes investing in different funds, property investments, and locations.



At our Dundurn investment, the purchase price was $286,000. The renovation cost was $65,000, with the ending sale price being $456,000. The total profit for this flip with a quick sale was $105,000, showcasing the value of the physical property increasing!

How to Start Investing in Property

However you choose to invest in real estate, Pal Property Solutions can help you! We have a suite of solutions, including property analysis, renovations, buying and selling, property & operations management, and design & space optimization, all while helping you ensure you attain your financial freedom!

Ready to get started? Don’t forget to download our Getting Your Foot in the Door book which covers the most frequently asked questions as well as lessons learned from our founder, Alex Pal.


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