Real estate investments are a safe option as they offer lower risk, higher returns and enable you to have a broad investment portfolio
Many investors still place their money on stocks. Although these are still a well-known investment option, not everyone knows that a real estate investment is also considered a good investment option, as you're purchasing physical assets.
The first step to any investment is to plan out a strategy that fits your budget and needs. Whether it's for your retirement, saving for your kids’ college, or to have another source of income, we advise you to have a plan.
Investments in real estate are a good choice as they offer lower risk, higher returns and allow you to have a broad investments’ portfolio, i.e., you have plenty of choices to invest on. When you buy real estate, you possess actual land or property in contrast to when you buy stocks, where you’re only purchasing a small part of a business or company. Most real estate owners make money by renting out the property and through appreciation (which can also turn into a source of steady income), as the property value goes up.
Pros of investing in real estate
It is true that buying a property requires you to save a little more than if you were investing in the stock market. Nonetheless, when purchasing a property, investors have more leverage over their capital, enabling them to manage it better, and also purchase a more valuable investment asset.
Sense of security
With uncertainties all around the world, people are seeking for some sense of security. While tangible assets might not yield immediate returns, the truth is that they are still less volatile during tough economic times, such as right now during a global crisis caused by the pandemic.
It is important to mention that the number of owners picking up alternatives, like property acquisition through the €350k Golden Visa programme, or venture capital has also substantially increased over the last years.
It is a stable investment
Prospective buyers find real estate investments appealing as they have something to be accountable for; besides being a diversified investment option, they are also a tangible asset that can be managed.
In an interview held by CNBC, millionaires who invest in real estate, state that investing in real estate allows you to protect yourself and your wealth.
Although the real estate market goes up and down depending on demand and supply, as well as political and governmental factors, it has never actually deteriorated or declined over time. This ensures that if you choose to buy a property with inherent value in a premium area, such as central Lisbon, for instance, you will still get good value and yield from your real estate investment.
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It enables you to generate positive cash flow and turn it into a passive income
As mentioned above, investing in real estate allows you to rent out the property you purchased. If you can get enough rent to cover your expenses you are effectively getting the tenant to buy the property for you.
When you put down the deposit, the people renting the property pay for the mortgage and the expenses. Savvy investors know that this will generate some money, practice known as generating positive cash flow and eventually passive income; and as you pay off your mortgage, over time, you gain even more positive cash flow.
With enough time and a broad investment portfolio, you will be able to secure a positive cash flow and can eventually fund your lifestyle through this source of income.
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Portugal’s capital, Lisbon, is brimming with foreign investment. Having been considered Europe’s hottest real estate market, more and more foreigners are wanting to flock into the country for a quality lifestyle and very attractive tax and citizenship benefits.
Despite facing turbulent times, our teams at Portugal Homes are still working, closing clients and showing and selling property using every digital touchpoint to help our avid investors, as well as bringing liquidity to many developers and private vendors in Portugal’s core cities.